GST/HST introduced for non-resident E-commerce players

  • By Bhavnoor Singh Bhatia
    • 16-11-2022
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The Fall Economic Statement 2020 (FES) proposes the application of GST/HST to non-resident vendors and non-resident distribution platform operators (‘non-resident players’).

FES proposes the introduction of the registration requirements, collection, and remittance of tax for such non-resident players on supplies made to Canadian consumers. This is being proposed with a view to lay down a level playing field for resident and non-resident players.

Regulate the biggest e-commerces sites

This move appears to have been proposed to widen the tax net to tap all of the biggest e-commerce platforms on the market like Amazon, Netflix, Airbnb. It aims at tapping the GST/HST leakage on online purchases from non-resident players.

For doing so and to facilitate compliance, a new simplified system has been proposed as well. Some key features of the system include:

  1. Online portal for registration and remittance;
  2. GST/HST remittance and collection only on supplies to Canadian consumers. No remittance and collection on supplies to business;
  3. Customer’s usual place of residence (consumption-based) to identify the place of supply subject to few exceptions;
  4. No input tax credit for non-resident vendor/platform providers;
  5. A general threshold of $30,000 for registration applies to non-resident vendor/platform providers as well.

Self-assessment and paiement of taxes

It is important to note that procurements by GST/HST registered businesses will continue to self-assess and remit GST/HST on procurements of digital products and services from non-resident players unless the procurement is for exclusive use in commercial activities of the business. Additionally, a penalty shall be levied if a person provides GST/HST registration number for purchases made for personal consumption.

Note: For the purpose of determining the usual place of residence, the FES proposes certain indicators such as a home address, billing address, Internet Protocol address of the device used, bank or payment information, and subscriber identification module (SIM) card that relates to the recipient. The usual place of residence shall be Canada provided two or more indicators identify likewise.

The proposed rule shall be effective on or after July 1st, 2021.

Bhavnoor Singh Bhatia – Sales Tax consultant

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Bhavnoor Singh Bhatia
Bhavnoor Singh Bhatia

Sales tax consultant

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