Sales Tax, VAT and Trade

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Understanding complex taxes to improve global business opportunities

2011-09-30: QST Harmonization Announcement

Quebec and the federal government announced today the signing of an agreement regarding sales tax harmonization. Under this agreement, Quebec will obtain financial compensation of $2.2 billion from the federal government for the harmonization of the QST with the GST. Both governments will make their best efforts to enter into a Canada-Quebec Comprehensive Integrated Tax Coordination Agreement by April 1, 2012. The changes that Quebec has agreed to make to the QST should be implemented on January 1, 2013. The most important changes to the QST system arising from the agreement on harmonization with the GST system are as follows:

  • The QST will apply on the selling price excluding GST 
  • All the QST exemptions will be maintained 
  • Harmonization of the QST rules with the GST for financial services and financial institutions, and elimination of the Quebec compensatory tax on financial institutions. 
  • Phase out of the restrictions on input tax refunds for large businesses during a phase-out period of not more than three years starting in 2018. 
  • Revenue Quebec will continue to administer the GST/HST/QST in Quebec, except for selected listed financial institutions and specified financial institutions for which the GST/HST/QST will be administered by the Canada Revenue Agency

Canada operates within a complex indirect tax system. While some provinces have harmonization between federal and local indirect taxes, others operate with two systems in parallel. The lack of indirect tax harmonization can make it difficult for domestic and foreign corporations to operate in Canada.

Tax and export compliance also extends outside of Canadian borders. Governments worldwide use indirect taxes as a source of income, which leaves companies in Canada with complicated and fast-changing indirect tax compliance requirements. How can businesses that wish to successfully expand their operation or export goods juggle the time and resources to stay on top of indirect tax compliance changes?

PricewaterhouseCoopers can help these companies formulate, implement and manage their indirect tax blueprint. Our global and Canadian network allows us to work closely across provincial and international borders to help companies with tax and customs issues including the following:

How PricewaterhouseCoopers can help

We have more than 1,600 indirect tax professionals in 118 countries worldwide. Our integrated approach means you have access to income tax, transfer pricing, sales tax and trade professionals who will provide you with informed and up-to-date knowledge of Canada’s tax landscape.

Contact a Sales Tax, VAT and Trade Services professional in your area to discuss your unique taxation concerns.


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