Understanding Québec’s Tax Requirements for Non-Resident Businesses

With nine million inhabitants, Quebec is the second largest province in Canada. Its tax system is the most autonomous of all Canadian provinces.  As French is the official language, some filings and guidelines are only provided in French.

Several tax issues must be addressed when it comes time for a non-resident corporation doing business in Quebec/Canada:

1) Registration to tax programs

2) Periodic filing of tax returns

3) Payment or recovery of tax amounts

4) Filing security

Sales Tax

The GST/HST (federal level) and the QST (Quebec level) are value-added taxes. Generally speaking, the amount of tax paid on imports and purchases can be credited against the amount of taxes collected on sales. Is it necessary to register for the GST/HST and the QST? And if so, under which of the two main programs? Certain non-resident companies operating in the digital economy, in particular, may be subject to registration under a simplified program. The issue of reporting frequency and the mandatory information that must appear on invoices must also be addressed.

Import

If your company sells goods in Canada and your Canadian customers require that you retain ownership of those goods until they are delivered to them, you may consider registering with the federal government’s import program.

Corporate Tax

Several countries have a treaty with Canada that allows you to pay corporate income tax in your country of origin instead of in Canada, but to do so, you must invoke the tax treaty in question. In addition, you could also be able to recover the withholding tax your customer may have deduct on your sales at a rate of 15% for the federal level and 9% for Quebec.

Advisory and Compliance

Don’t hesitate to contact us to learn about your tax obligations and to entrust us with tax compliance. Our goal is to achieve tax compliance while minimizing both operating and management costs. Ad Valorem is a firm that handles tax compliance for numerous foreign companies.

To get a detailed quote, send us a description of your business activities in Quebec/Canada as well as the terms of your sales of goods and services and any correspondence you may have received from Canadian tax authorities/from your clients such as the federal form T4A- NR “Statement of Fees, Commissions or other amount Paid to Non-Residents for Services Rendered in Canada” and the Quebec equivalent.