Online sales of goods and services are intensifying and causing major tax losses in Quebec. The government lost $365 million in 2020 because it is unable to collect all of its sales tax from suppliers outside its territory.
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After six years of investigation at the heart of Revenu Québec, the Auditor General finds that the non-collection of the Québec sales tax (QST) on this type of purchase leads to increasingly significant tax losses for Québec.
“The non-collection of the QST also creates inequity with regard to Quebec businesses. Revenu Québec must ensure that this tax is collected by suppliers,” says the Auditor General of Québec.
This phenomenon is also growing and its pace is accelerating.
In 2014, the annual value of online purchases in Quebec amounted to $6.6 billion. Since then, this value has exploded, rising to nearly $21 billion in 2020, which resulted in tax losses of $365 million, notes the VG.
In comparison, the Government of Quebec would have lost 270 million in tax collection in 2017, while online sales reached almost $12 billion.
Gaps
Although new provisions aimed at reducing and limiting these losses have been gradually implemented since 2019, the AG believes that Revenu Québec must better monitor transactions and ensure that the QVT is collected.
“Clues lead us to believe that the amounts given to him might be higher if certain shortcomings were corrected,” he said.
This tax must now be levied on goods sold through the distribution platform directly. Businesses must register with Revenu Québec.
However, Revenu Québec is struggling, “until now”, to assess “adequately the achievement of the objectives” put in place. Little verification is then done with the companies. In particular, it must improve its working methods in order to collect the tax for “intangible” sales, such as the downloading of films, music, video games or applications on digital platforms.
Lack of rigor
The AG also asks 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, since 2012, the QST remitted to Revenu Québec by the Border Services Agency for goods delivered by mail has not increased and has represented $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.