Canada GST on digital and e-services

Canada does levy federal Goods and Services Tax on digital services, or ‘e-commerce transactions conducted over computer networks’.

However, non-resident providers are only liable to register if they have a permanent establishment in Canada. Triggers for permanent establishment include: locations of agents or employees; place of delivery and payment; location of inventory; and physical presence such as office.

Canadian located servers hosting a non-resident business’ website for trading will not trigger a permanent establishment. A web site is not tangible property and does not have a physical presence in Canada. However, if you own the server, it is tangible property – a physical location in Canada – and forms a permanent establishment.

Electronic services liable to Canadian GST include: downloads of music, games, software, app’s or subscriptions to websites. Application hosting and data warehousing. Telecoms services.

A number of Canadian provinces do levy local sales tax on non-resident providers of digital services.


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