online shopping | Tax losses of 365 million for Quebec

(Quebec) As many as US$365 million was lost to the Treasury in 2020 due to tax negligence because QST was not collected for online purchases from foreign suppliers. Tax losses are still significant for Quebec despite a turnaround in 2019.

Posted at 10:19 am

Tommy Chouinard

Tommy Chouinard
The press

This is revealed by Quebec Auditor General Guylaine Leclerc in a report presented to the National Assembly on Wednesday.

She blames Revenu Québec for the poor handling of the new rules aimed at limiting these losses, which have been phased in since 2019. She points out that not only is the state losing hundreds of millions in revenue, but the laxity of the tax authorities is causing an “injustice to Quebec businesses.”

“Failure to collect Quebec Sales Tax (QST) on sales of goods and services from non-Quebec suppliers to consumers results in significant tax shortfalls. These losses are estimated at around 270 million for 2017 and 365 million for 2020,” states the auditor.

It commemorates Revenu Québec’s role in “ensuring that this tax is collected from and remitted to non-Québec suppliers.”

Since 1ah As of January 1, 2019, foreign providers and distribution platform operators are required to collect the QST from consumers in Quebec for the purchase of intangible goods or services (such as downloading movies or music). The money must be handed over to the tax office.

But for this sector alone “there would have been losses of 42.8 million […] despite the entry into force of legal provisions relating to these sales in 2019”. Losses are still declining since 2018-2019 when they hit 99.6 million this year.

But it is precisely with “real assets” that the losses have increased. They have doubled to 318.6 million in three years.

Under an agreement between Quebec and Ottawa, the Canada Border Services Agency is responsible for collecting the QST on behalf of the Quebec government for goods from abroad delivered by mail or courier. However, Revenu Québec “does not adequately oversee the activities entrusted to the federal agency” and “does not adequately administer the arrangement.”

Thus, despite the measures taken, Quebec is still suffering tax shortfalls on goods coming from abroad. “Evidence suggests” that these losses were “substantial,” the report said.

“For example, from 2012 to 2020, QST remitted to the Quebec government for goods shipped through the mail remained stable (5.4 million), while the value of online purchases and the number of packages sent to Canada from abroad have increased significantly “.

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

“Although QST remitted to Revenu Québec for goods delivered by courier has increased over the years (to 48.1 million in 2020), issues surrounding current practices suggest there are still tax losses associated with these assets could,” the auditors said.

Since the new rules came into effect on Janah From July 2021, the QST must now be levied on goods sold via distribution platforms. “Although these provisions were only recently introduced, Revenu Québec needs to improve its controls to increase tax recovery on these assets,” the auditor general said. “His monitoring of the implementation” of these new rules is “insufficient”.

According to her, “Revenu Québec has not adequately assessed the achievement of the objectives of the measures, namely limiting tax losses in this sector and treating suppliers fairly”. “Indices lead us to believe that the amounts given to him could be higher if certain deficiencies were addressed.”

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