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Canada

Explore the requirements and rules that apply to electronically supplied services in Canada.

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Supplies of e-services to consumers (B2C)

Is a non-resident supplier of e-services to consumers located in this country obliged to register and/or account for local VAT/GST on such supplies in this country?

It will depend on the exact facts and circumstances. In general, a non-resident vendor who carries on business in Canada is required to register for GST and collect GST if the non-resident vendor makes taxable supplies in Canada. The Canada Revenue Agency (CRA) has provided a list of various factors to consider when making this determination, including among others, the place of delivery, the place of payment, the place where purchases are made, the location of an inventory of goods and the location of a bank account. The weight of each factor for a particular business will depend on the specific facts and circumstances of the business. It is important to note that a non-resident vendor may carry on a business in Canada even if the vendor does not have a permanent establishment in Canada. In general, a supply of personal property or a service, except for certain supplies, made in Canada by a non-resident vendor not registered for GST is deemed to be made outside Canada unless the supply is made in the course of a business carried on in Canada. However, this deeming provision does not apply to the supply of an admission in respect of a place of amusement, a seminar, an activity or an event where the non-resident vendor did not acquire the admission from another person. However, depending on the specific facts, at the time of import, the GST will generally have to be paid on the taxable imported goods or self-assessed by Canadian residents on imported taxable intangible personal property and services.

If there is no current requirement, is there any anticipated change to that position?

In its 2014 federal budget, the government announced consultation on the issue of ensuring the effective collection for sales tax on e-commerce sales to Canadians made by non-resident vendors.

Is an invoice compliant with the VAT/GST law in the customer's country required?

Yes.

Supplies of e-services to businesses (B2B)

Is a non-resident supplier of e-services to business customers located in this country obliged to register and/or account for local VAT/GST on such supplies in this country?

As for B2C supplies, this will depend on the exact facts and circumstances.

If there is no current requirement, is there any anticipated change to that position?

In its 2014 federal budget, the government announced consultation on the issue of ensuring the effective collection for sales tax on e-commerce sales to Canadians made by non-resident vendors.

If there is not a requirement for the non-resident supplier to register for VAT/GST, are the services subject to VAT/GST withholding by the customer?

Yes. In general, where a non-resident vendor does not charge and collect GST, the recipient in Canada must self-assess GST on imported services if those supplies are not acquired exclusively in the course of the recipient's commercial activities.

Where there is a current or future requirement for non-resident suppliers to register and/or account for local VAT/GST or a customer VAT withholding requirement:

When did/will that requirement come into effect?

The current rules have been in place since the introduction of GST in Canada.

What is the applicable annual turnover threshold (in local currency) for that requirement to apply?

General rules apply. In general, a vendor that makes taxable supplies in Canada must register for GST if the value of the taxable supplies made in Canada or outside Canada by the vendor and any associated entities exceeds 30,000 Canadian dollars (CAD) in the last four consecutive quarters or in a single quarter.

Is simplified or standard registration required?

Standard.

Does the requirement apply to all e-services?

A non-resident vendor registered for GST must charge GST on all its taxable supplies made in Canada.

Contacts

John Bain
Partner
T +1 (416) 777 3894
E jbain1@kpmg.ca

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