Is Your Business Ready for New Canadian Tax Rules?

New tax measures for foreign-based vendors in Canada went into effect on July 1, 2021. The updated goods and services tax (GST)/ harmonized sales tax (HST) collection rules apply to foreign based vendors for Cross-Border Digital Products and Cross-Border services; Goods Supplied through Fulfillment Warehouses; and on Platform-based Short-Term Accommodations.

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Under the previous GST/HST rules, foreign-based vendors without a physical presence in Canada were not required to register and collect GST/HST on their Canadian sales, which often resulted in the GST/HST not being collected on online purchases from non-resident vendors or made through digital platforms.

The world’s rapidly growing e-commerce and digital marketplace has many countries, including Canada, introducing new legislation to address these economic changes. Digital services rules now exist in over 90 countries around the world. In addition, many provinces are implementing new tax policies in 2021. Quebec is the latest to harmonize its provincial tax rules with GST/HST federal tax rules.

In the USMCA trade agreement, Canada agreed to new de minimis thresholds for customs duties and taxes on imported goods shipped by courier. This new low value shipment program applies to many smaller B2C shippers from Maine.

If you have questions, please contact MITC Canada Desk Director Jeff Bennett.