Canada taxes digital services and intangible property sold by non-resident vendors to consumers (B2C) based on where the customer is located. Once a certain revenue level is reached, these vendors need to register for GST/HST. The vendor takes care of the GST obligations if they sell directly to customers. However, if sales happen through an online platform, the platform might be the one responsible for collecting the tax. It's crucial for non-resident providers to understand their sales model, keep an eye on their revenue, and stay updated with federal and provincial tax rules to make sure they're compliant.
Canada Extends Destination-Based GST/HST to Digital Services
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Author: Ljubica Blagojević
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General subject related
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Content accuracy validation date:
12.05.2025
Content accuracy validation time:
08:29h
Canada applies destination-based place-of-supply rules for digital services and intangible property provided by non-resident suppliers in B2C transactions. These suppliers must register for GST/HST once they reach the applicable revenue threshold, either under the simplified or normal GST scheme.
Important Points:
- Direct supplies by non-resident providers to Canadian consumers place the GST compliance obligation on the supplier.
- When services are provided via a digital platform, the platform may be considered the tax-responsible party, shifting the GST obligations accordingly.
- Registration is required when thresholds are met, and the responsibility depends on the supply structure (direct vs. platform-based).
Canada’s GST rules reflect a broader international trend of taxing cross-border digital services based on consumer location. Clear distinctions in tax responsibility—between the supplier and digital platform—are crucial for compliance. Non-resident providers should evaluate their distribution model, track Canadian turnover, and ensure proper registration and invoicing. Referencing flowcharts and official guides is advisable for navigating federal and provincial sales tax variations.
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