New Québec Tax Obligations as of January 1st, 2020

With 2019 coming to an end, important deadlines are upon our doorsteps in connection with taxes imposed in Québec, and in particular under the Act Respecting the Québec Sales Tax. Enforcement measures will become a reality under the new specified Québec sales tax (QST) regime for non-resident suppliers, and registration obligations are being expanded for Québec lodging tax purposes.

NEW QST REGIME FOR NON-RESIDENT SUPPLIERS

A new regime under which registration for QST purposes is mandatory for non-resident suppliers that have certain activities in Québec, including for certain digital platforms, was introduced in the Québec Budget 2018-2019 on March 27, 2018. Please refer to our articles here and here for greater detail on this regime.

When the Québec government rolled out the new regime as part of the Budget 2018-2019, it had announced that during the 12-month period following the date of application of the new system, Revenu Québec would adopt a practical approach to compliance. Where non-resident suppliers showed that they had taken reasonable measures to meet their new obligations, for example by making changes to their systems, and they were still unable to meet these obligations, then Revenu Québec would assist them and no penalty would be imposed. However, after this 12-month period, the penalties provided for in the existing tax legislation would be imposed on non-resident suppliers that have not complied with the new obligations.

The date of application of the major components of the new QST regime was January 1, 2019, and Revenu Québec may, as of January 1, 2020, impose compliance measures to persons targeted by the new regime.

OPERATORS OF DIGITAL ACCOMMODATION PLATFORMS

As of January 1st, 2020, operators of a digital accommodation platform (“DAP”) may have new registration obligations for purposes of the Québec tax on lodging, and thus may have to begin to collect and remit such tax in connection with supplies of accommodation units subject to the Québec tax on lodging. For such purposes, a DAP means a digital platform through which a person brings together the supplier of an accommodation unit and a recipient, and provides a framework for their interaction and manages their financial transactions.

Generally, the Québec tax on lodging is applicable if the operator of the DAP receives amounts as consideration for the rental of an accommodation unit (e.g., a bed, a room, an apartment, a house or a cottage) in an establishment subject to the tax on lodging (i.e., generally a sleeping-accommodation establishment located in Québec - other than in Nunavik – in which at least one accommodation unit is regularly offered and publicly advertised for rent to tourists, in return for payment, for a period of not exceeding 31 days).

Such DAP may also have the obligation to register for QST purposes, including under the non-resident supplier regime (please see above).

Please do not hesitate to contact a member of our team for more guidance if you think that you may be affected by any of these developments and new measures.

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