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Canada reviews GST on foreign e-retailers

  • Feb 24, 2014 | Richard Asquith

Canada reviews GST on foreign e-retailers

Canada is joining Australia and Japan in considering subjecting non-resident online retailers to Canadian Goods & Services Tax.

The Canadian authorities have opened a public consultation on the issue, inviting interested parties to comment on the financial and administrative issue that would arise from obliging non-Canadian resident e-retailers to register for GST (including HST and PST), and charge it like resident retailers.  Aside from an attractive, new source of revenue for the Canadian Federal government, this would also seek to level the playing field for domestic online and traditional retailers.

Following Australia, Japan, OECD and the EU

The proposal will follow similar consultations around the world as countries seek to capture more of the ballooning web retail market.  Australia has been considering raising the GST exempt threshold from the current AUS1,000 for foreign retailers.  New Zealand is looking how to GST charge non-resident e-commerce too.  Japan is investigating how it can impose its Consumption Tax on foreign internet companies selling to its consumers.

South Africa is planning to introduce VAT on digital services from non-resident companies to its consumers from 1 April 2014.  This would target digital downloads of music, films, video, books and cloud computing services.  The European Union introduced VAT on non-resident goods retailers over 10 years ago.  It is about to go through a major revision on the place of supply rules for EU-based digital services provider from 1 January 2015.  This will shift the place of taxation from the location of the supplier to the place of the consumer.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara