Online shopping | Tax losses of 365 million for Quebec

(Quebec) Due to tax inaction, at least $365 million escaped the public treasury in 2020 because QST was not charged on online purchases made from foreign suppliers. Tax losses remain significant in Quebec despite a turn of the screw in 2019.

Posted at 10:19 am
Updated at 1:02 PM.

Tommy Chouinard

Tommy Chouinard
Journalism

This was disclosed by Quebec’s auditor general, Guylaine Leclerc, in a report presented at the National Assembly on Wednesday.

She blames Revenu Québec for its poor management of the new rules aimed at limiting these losses that have been implemented gradually since 2019. She notes that in addition to depriving the state of hundreds of millions of revenue, the tax authorities’ laxity is causing an “unfairness towards Quebec companies”. “.

“Failure to collect Quebec Sales Tax (QST) on sales of goods and services provided by suppliers outside Quebec to consumers results in significant tax losses. These losses are estimated at 270 million for 2017 and 365 million for 2020,” notes the auditor.

It refers to Revenu Québec’s role in “ensure that this tax is collected and remitted to suppliers outside Québec”.

1 . agoVerse In January 2019, foreign suppliers and distribution platform operators are required to charge QST from consumers in Quebec to purchase intangible property or services (download movies or music, for example). The money must be handed over to the tax authorities.

But for this sector alone “there were losses of 42.8 million […] Although legal provisions related to these sales came into effect in 2019. Losses have been declining since 2018-2019, when they reached 99.6 million that year.

But losses were magnified especially in relation to “tangible assets”. It doubled in three years to 318.6 million.

Under an agreement between Quebec and Ottawa, the Canada Border Services Agency is responsible, on behalf of the Government of Quebec, for collecting QST on goods from abroad and delivering them by mail or courier. However, Revenu Québec “does not adequately monitor the mandated activities” of the federal agency and “inadequately manages the agreement”.

Thus, “Despite the measures taken, Quebec continues to suffer tax losses on goods imported from abroad.” Indications are that these losses are “significant,” according to the report.

For example, from 2012 to 2020, QST transferred to the Quebec government for goods transported by mail remained stable (5.4 million), while the value of online purchases and the number of packages shipped to Canada from abroad increased significantly. »

Online purchases by consumers in Quebec increased from 6.6 billion to 20.9 billion from 2014 to 2020.

Although QST transferred to Revenu Québec for mail-delivered goods has increased over the years (to reach $48.1 million in 2020), issues with established practice indicate that tax losses can still be linked to these goods.

Guylaine Leclerc, Auditor General of Quebec City

Since the entry into force of the new rules on 1Verse July 2021, QST must now be accumulated on merchandise sold through distribution platforms. “Despite the recent introduction of these provisions, Revenu Québec must improve its controls in order to increase tax recovery on these assets,” said the auditor general. His oversight of the implementation of these new rules is insufficient.

According to her, “So far, Revenu Québec has not sufficiently assessed to achieve the objectives of the measures, that is, to reduce tax losses in this sector and to treat suppliers fairly.” “Indications lead us to believe that the amounts awarded to him could be higher if some of the deficiencies are corrected.”

During a brief meeting, Finance Minister Eric Girard replied that “Quebec is a leader in terms of digital taxation.” “As for the recommendations of the auditor general, we will take all of that into account,” he added.

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