(Quebec) Quebec will prohibit those who make tax evasion from winning public contracts. And he will hire 75 people to give Revenu Québec a new unit specializing in international tax planning.
Finance Minister Carlos Leitao on Friday presented an action plan “to ensure tax fairness” and fight against tax havens. He tabled it in the National Assembly during an interpellation of the Québec Solidaire deputy, Amir Khadir, on the management of online commerce.
This action plan is the minister’s response to the report of the parliamentary committee on public finance on the phenomenon of the use of tax havens, made public in May. It takes up, in part, the recommendations of the members of this committee.
In his action plan, Leitao confirms his intention, revealed earlier this week by La Presse , to impose the sales tax on all online goods and services offered by foreign suppliers such as Netflix.
Québec intends to “extend to abusive tax avoidance, including abusive tax avoidance using tax havens, the prohibition of contracting public contracts issued by the Autorité des marchés financiers”. This prohibition already exists for those who have committed certain criminal offenses and tax evasion. Quebec will now remove from its list of suppliers those who have been assessed for abusive tax avoidance.
Quebec also intends to “deprive government firms of professional firms that have assisted in abusive tax avoidance”. It will analyze “the possibility of reviewing the eligibility of companies involved in abusive tax avoidance transactions to any form of financial assistance from the Government of Quebec”. The Committee on Public Finance asked him not to give subsidies to offenders.
The government will hire 75 people to create an “intervention group specialized in international tax planning” at Revenu Québec. The objective is, among other things, to “identify, verify and assess taxpayers at fault and strengthen internal analyzes and approaches to promote tax compliance”.
Quebec rejects the creation of a tax on misappropriated profits, better known as the “Google tax”. The Committee on Public Finance recommended that it study this measure. But “it would be counterproductive and have more disadvantages than benefits,” according to the government.
Quebec will set up a compensation program for tax informers. “Basically, Quebec’s remunerated denunciation program will focus on information that may sometimes not be easily accessible to Revenu Québec, namely information relating to transactions that constitute a sham. It will also cover operations leading to the application of the general anti-avoidance rule, “reads the action plan. To be eligible for compensation, whistleblowers will have to provide information resulting in the recovery of at least $ 100,000 of rights under a Quebec tax law. The remuneration of an informant may reach 15% of the fees, regardless of the penalties and interest, which will be recovered by Revenu Québec.
The Canada Revenue Agency has had such a program since 2014, but it “explicitly targets tax denunciations of activities occurring abroad”. “Quebec is taking a complementary approach to the federal program by targeting abusive tax planning in Quebec,” says the action plan.
Québec estimates at $ 686 million its tax losses associated with the use of tax havens in 2017:
$ 159 million attributable to profits diverted by multinational corporations;
$ 270 million attributable to the non-collection of sales tax on purchases of goods and services on-line;
$ 257 million attributable to the use of tax havens by individuals.