Quebec released its economic action plan November 10, 2017.
It proposes new initiatives to address tax havens, aggressive tax planning and transfer pricing, among other things. Significantly, it proposes to restrict taxpayers who have been subject to the General Anti-Avoidance Rule (GAAR) from entering into contracts with the Quebec government. It also introduces changes to the province's "tax informant program", which would reward individuals for providing Revenu Quebec with information about certain aggressive transactions.
Many of the initiatives will rely on cooperation with federal authorities.
Quebec delivered its Economic Action Plan the same day it issued information bulletin 2017-10 "Measures Announced in the Tax Fairness Action Plan", which increases the existing penalty for a GAAR assessment to 50% (from 25%), effective February 1, 2018. The bulletin also suspends the start of the normal reassessment period in certain situations related to GAAR, among other things.
Some of the key measures from Quebec's new economic action plan are detailed below.
Prohibiting contracts with governmental bodies
The economic action plan proposes to prohibit individuals and businesses who have received a final GAAR assessment from obtaining public contracts. Such taxpayers will be unable to obtain authorization to bid for public contracts and will be listed in the Register of Enterprises Ineligible for Public Contracts.
This restriction will also apply to partnerships where one of the members of that partnership had received such an assessment, as well as to professional firms that have assisted with the implementation of aggressive tax planning (see TaxNewsFlash-Canada no. 2017-55, "Quebec Increases Penalties on Aggressive Tax Planning").
Proposed tax-informant reward program
The plan proposes to add a reward program to Quebec's "Tax Informant Reward Program", which targets transactions and operations deemed to conceal the true nature of certain transactions, as well as transactions that have been subject to a GAAR reassessment. Under the reward program, informants who provide information leading to the recovery of at least $100 000 under Québec tax legislation could be eligible for an award that may amount to as much as 15% of the income taxes and other indirect taxes and charges (i.e., permits, licenses, etc.) recovered by Revenu Québec (not including penalties and interest).
This program is similar to the CRA's Offshore Tax Informant Program, which permits Revenu Quebec to access sensitive information under the Agreement Concerning the Exchange of Information Regarding Taxes and Other Duties with the CRA.
Increasing access to the information of the Business Register
The action plan proposes a measure that would require businesses to register with the Registre des entreprises du Québec (REQ) in order to operate in Quebec. According to the Plan, the REQ will require additional information from businesses during registration.
Changes to accessing government subsidies
In Quebec, taxpayers can request that an Attestation de Revenu Québec document be issued to confirm that they have no unpaid taxes and have filed all tax returns. The Plan announces that taxpayers may be required to provide an "Attestation de Revenu Québec" before obtaining any government subsidies.
New requirements for trusts
According to the Plan, rules for trusts that are subject to Quebec income tax or that have a substantial connection with the province will be modified. Each trust will have a tax identification number to ensure the trust is not used for aggressive tax avoidance or evasion and information will have to be filed about the trust, its main parties, and its assets and activities.
For more information, contact your KPMG adviser.
Information is current to December 05, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500