Online Sales Outside Quebec: Tax Losses Are Exploding

Online sales of goods and services are increasing, causing huge tax losses in Quebec. The government lost $365 million in 2020 from being unable to collect all of its sales tax from suppliers outside its jurisdiction.

• Also read: Less than one in six Quebecers have used the Blue Basket since its inception

After six years of investigation in the heart of Revenu Québec, the Auditor General finds that failing to collect the Québec Sales Tax (QST) on these types of purchases is resulting in increasing tax losses for Québec.

“The non-collection of the QST also creates inequalities in relation to businesses in Quebec. Revenu Québec needs to ensure that suppliers collect this tax,” says the Québec Auditor General.

This phenomenon is also increasing and accelerating.

In 2014, the annual value of online shopping in Quebec was $6.6 billion. Since then, that value has skyrocketed, rising to nearly $21 billion in 2020, resulting in $365 million in tax losses, the VG notes.

In comparison, the Quebec government would have lost $270 million in tax revenue in 2017 while online sales hit nearly $12 billion.

Gaps

Although new regulations have been phased in to reduce and limit these losses since 2019, AG believes that Revenu Québec needs to better monitor transactions and ensure QVT is collected.

“Evidence leads us to believe that the amounts allocated to him could be higher if certain deficiencies were addressed,” he said.

This tax must now be levied directly on goods sold through the distribution platform. Businesses must register with Revenu Québec.

However, Revenu Québec has “so far” found it difficult to “appropriately assess the achievement of the goals set”. Little is then verified by the companies. In particular, it needs to improve its working methods to collect the tax on “intangible” transactions such as downloading films, music, video games or applications on digital platforms.

lack of rigor

The WG is also asking the organization to better manage its agreement with the federal government, which grants the Canada Border Services Agency the collection of QST on goods imported by mail or courier.

For example, the QST remitted by the Border Services Agency to Revenu Québec for goods delivered by mail has not increased since 2012 and has been $5.4 million per year for 10 years. However, the number of packages delivered by Canada Post has increased by 40 million over the same period.

“Revenu Québec does not adequately monitor the activities entrusted to the Border Services Agency,” he said.

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