Tax alert

QST new specified registration system

New provisions for non-resident suppliers

December 2018

The administration and compliance for many organizations selling goods to customers in Quebec is becoming that much more complicated as the province  is trying to ensure that Quebec consumers (and in some cases businesses as well) pay tax in respect of purchases from non-resident businesses.

Quebec’s 2018 budget announced the implementation of a new Quebec Sales Tax (QST) regime to collect QST from businesses that are non-resident of Quebec.

Under the new rules Act respecting the Quebec sales tax (AQST), certain foreign businesses have until January 1, 2019 to register for the QST using the new specified registration system and will have to collect the QST at a rate of 9.975 percent on certain goods and services they supply in Quebec to specified Quebec consumers.

For purposes of these provisions, taxable incorporeal movable property and services includes but is not limited to cloud services and downloads of digital software, music and entertainment products.

Canadian businesses to whom these rules apply, known as Canadian specified suppliers, will have until September 1, 2019 to comply under the new AQST rules.  

Foreign specified suppliers

Non-Quebec resident suppliers that are located outside Canada and not registered for the purposes of goods and services tax (GST) are considered foreign specified suppliers as defined under the new provisions.

Canadian specified suppliers

Non-Quebec resident suppliers located in Canada and non-Quebec resident suppliers located outside Canada that are registered for the GST are considered Canadian specified suppliers as defined under the new provisions.

Specified Quebec consumer

A specified Quebec consumer is a consumer that is resident in Quebec that is not registered for QST purposes.

Specified registration system

A non-resident supplier must register for the new QST regime form the first day of a calendar month in which their sales to Quebec consumers exceeds $30,000.

The non-Quebec resident suppliers located outside Quebec will need to provide information about their business, information relating to its activities and the names of persons of authority.

A new website was launched to allow non-Quebec resident suppliers located outside Canada to register online using the specified registration system. 

Once registered, non-Quebec residents will receive a QST number beginning with the prefix “NR” which will differentiate them from the QST registrants that are required to be registered due to their activities in the province.

To determine how or if these provisions apply to your organization, please contact one of our firm’s sales tax specialists to help navigate through the application of these rules. 

Who do the new rules apply to?
Canadian Specified Supplier

Non-Quebec resident suppliers located in Canada and non-Quebec resident suppliers located outside Canada that are registered for the GST are considered Canadian specified suppliers as defined under the new provisions.

Foreign Specified Supplier:

Non-Quebec resident suppliers that are located outside Canada and not registered for the purposes of goods and services tax (GST) are considered foreign specified suppliers as defined under the new provisions.

Specified Digital Platform:

A specified digital platform generally is a digital platform for the distribution of property or services through which a particular person (i.e., the operator of a digital platform) enables a specified supplier to make a taxable supply of IPP or a service in Quebec.