|GST/HST Rate on Digital Services||GST/HST on Cross-Border Electronically Supplied Services||Digital Reporting Requirements for Foreign Sellers Providing Electronically Supplied Services|
|GST (Goods and Services Tax): 5%; HST (Harmonized Sales Tax): 13% and 15%||Yes||No|
GST/HST on Cross-Border Digital Services in Canada
Canada introduced federal rules for digital economy businesses effective July 1, 2021.
Non-residents supplying digital products and services to consumers in Canada should be required to register, charge, collect, and remit GST/HST on qualifying taxable supplies. This should apply to supplies to final consumers (B2C).
Digital Services in Scope
Supplies of the following electronically supplied services by non-resident suppliers should be subject to GST/HST in Canada:
- Online subscription-based video or music streaming
- Mobile apps
- E-books, downloadable Digital content
- Online video gaming
Supplies that should not be considered digital services in scope of the e-commerce rules include:
- Supplies that may not be consumed or used in Canada,
- Supplies that relate to tangible personal property or real property that is situated outside Canada, and
- Services that are supplied to a person in connection with a supply of short-term accommodation made to the person, and the consideration for which represents a booking fee, administration fee or other similar charges.
Determining the Location of the Canadian Consumer
To determine the location of the Canadian customer, the following data points should be taken into account.
- Home address of the customer
- Business address of the customer
- Billing address of the customer
- Internet Protocol address of the device used by the customer or similar data obtained through a geolocation method
- Payment-related information of the customer or other information used by the payment system
- Information from a subscriber identity module, or other similar modules, used by the customer
- The place at which a landline communication service is supplied to the customer; and
- Any other relevant information that the Minister may specify
GST/HST Registration for Foreign Companies
Foreign companies should register for GST/HST with the Canada Revenue Agency when the applicable thresholds are breached. Non-resident vendors that do not carry on business in the country may be able to complete a simplified registration, available only to these select companies. Businesses should be required to collect, remit, and file for sales to final consumers. Input tax is not recoverable under the simplified registration.
- Non-residents should be required to register when the threshold amount of applicable revenues exceeds CAD 30,000 over the 12-month period
- Fiscal representatives: A foreign business should not be required to appoint a tax representative in Canada to register for GST/HST However, a security deposit should be provided to the authority in cases where the non-resident business has no permanent establishment in Canada.
GST/HST Returns and payment of taxes
GST/HST returns for non-residents
Once registered, businesses should collect and remit taxes to Canadian Revenue Agency. Note that these are returns for non-resident companies - not to be confused with VAT returns of local companies.
Non-resident companies supplying cross-border supplies of digital products and services to Canadian consumers should register under the Simplified GST/HST.
|GST/HST Return Name||Simplified GST/HST return|
|Filing Frequency||Non-residents registered under the simplified system for e-commerce should file on a quarterly basis|
|Filing Deadline||One month after the end of the reporting period|
|Payment Deadline||One month after the end of the reporting period|
|Payment Currency||Canadian Dollars (CAD)|
|Input Tax Recovery||No, not for non-residents registered for digital services only and filing under the simplified system. Non-residents registered under the regular GST/HST rules may recover input tax credits.|
|Record Storage||All records and books of account must be stored for a period of six years from the end of the calendar year to which they refer. Non-residents may request authorization to keep records outside of Canada, subject to certain conditions.|
Digital Reporting Requirements for Cross-Border Digital Services
Digital reporting is not mandatory for non-residents in Canada.
For more information about digital reporting requirements in Canada see .