United States

Québec: Proposed Economic Nexus Requirements for Remote Sellers of Intangibles or Services and Marketplace Collection Requirements for Digital Goods and Services

Jun 04, 2018
From KPMG TaxWatch

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As part of its recently released 2018-2019 budget, the Québec government has proposed imposing a Québec sales tax (QST) collection requirement on remote sellers of taxable intangibles or services. Currently, suppliers of goods or services must register to collect QST only if they have a physical presence (permanent establishment) or a significant presence (carrying on of a business) in Québec. Under the proposed registration system, a seller of taxable intangibles or services would be required to register for and collect QST if its sales were above the registration threshold of CAD 30,000 ($23,500). Non-Canadian suppliers of services and intangible property would need to register before January 1, 2019. Although the new QST rules would not require vendors located outside of Canada that sell tangible goods to register, Québec has indicated that it intends to work with the Canadian government to improve the collection of QST on goods at the Canadian border. Canadian suppliers of tangible personal property, services, and intangibles that have no physical presence or significant presence in Quebec will be required to collect on all taxable sales and would need to register before September 1, 2019 if they are above the threshold.

In addition, certain digital property and services distribution platforms would be required to register and collect QST if they controlled key elements of transactions between remote vendors and Quebec purchasers, such as billing, transaction terms and conditions, and delivery terms. Distribution platforms would be required to collect and remit QST if they received over CAD 30,000 in consideration from taxable Quebec sales facilitated by the platform. The effective date for the new QST rules for distribution platforms would likely vary based on whether the vendors that use the platforms are located in Canada or outside Canada. For more information, please contact Phillipe Stephanny at 202-533-3082.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.