Canada implements the federal, provincial (or territorial) and local three-level taxation system. The federal and the provincial have relatively independent tax legislation power, and the local tax legislation power is vested by the province. Therefore, compared with other countries, Canada's tax is more complicated.
Recently, many sellers who are engaged in third-party sales platforms and independent stations have asked us whether it is necessary to register the Canadian GST tax code for Amazon. Besides registering the Canadian GST tax code for independent stations, is it necessary to register the PST tax code for all the four provinces? In response to your concerns, Amber will share with you some of the latest tax knowledge about the Canadian GST. It mainly includes Three major parts
1. New Mall Tax (MTC), the mall is only responsible for withholding tax, not responsible for sellers to declare and double tax refund.
2. What is amazon's tax policy on Canadian shopping malls?
3. How do independent sellers decide whether to register Canadian provincial tax codes?
Under the MTC rules introduced by the Canadian government on July 1, 2021, amazon, as an MPF of the Mall Tax Service, collects and pays Canadian federal and/or provincial sales tax to the sellers who sell local warehouses to supply goods to local consumers at Amazon.ca.
Mall tax means that depending on the destination of the buyer's order, Amazon may be legally obligated to calculate, collect and pay the applicable national or local sales tax, Goods and Services tax (GST) or value added tax (VAT).
If Amazon deducts less than the amount charged to the buyer, the seller is responsible for remitting the difference to the appropriate government agency. Amazon will not file or pay such taxes with government agencies on behalf of any seller, nor will it provide a double tax refund to the seller.
In which jurisdictions has Canada implemented mall tax regulations? When will these regulations be adopted?
For Canadian federal sales tax GST/HST and Quebec QC QST, if the seller has registered the corresponding tax number and uploaded it to Amazon, the mall tax is not applicable (i.e. the platform will not withhold the consumption tax);
For provincial excise tax PSTS in BC, Matto MB and Saskatchewan SK, the sales platform will withhold the PST regardless of whether the seller registered the PST himself or not.
For third-party platform sellers, if the sales platform (such as Amazon) has withheld the Canadian GST, do I still need to register the Canadian GST?
According to the mall tax law, the sales platform is only responsible for the payment of sales tax and is not responsible for the return of tax by the agent, including any regulatory fees, income or other taxes that may be payable on your sale of goods.
If a seller's sales order is double taxed due to mall tax, the seller can register his or her consumption tax number to obtain a credit or refund by filing.
The seller is taxed by the mall
There are many advantages to register with the Canadian Federal tax code GST/HST, which are listed as follows:
(1) Input Tax Credit (ITC) :
When applying for GST, the seller can apply for the import and export number of Canada, and use the Canadian import and export tax number for customs clearance. When VAT declaration is made, the import GST consumption tax can be deducted. In addition, for example, Amazon's FBA logistics and warehousing GST invoice can also be used for input tax deduction.
(2) Independent GST/HST declaration:
When the seller has his/her Canadian GST/HST tax number, he/she can collect the customer's consumption tax on his/her behalf, and then declare through the tax agent independently and pay the consumption tax offline during the quarterly report/annual report declaration period. At this time, Amazon will no longer withhold and pay the consumption tax.
Such as belong to the annual report, then you can declare before April 30 of the next year to pay taxes can; If your first fiscal year estimated net tax is less than 3,000 Canadian dollars or estimated annual sales less than 100,000 Canadian dollars, in the registration of the sales tax number does not need to pay security, can also apply for the annual report, for the seller, equivalent to increased tax part of the cash flow;
(3) The seller has its own Canadian GST/HST tax number: it can issue sales tax invoice by itself, which is more credible for the seller with offline transaction.
(4) There are 4 Canadian provincial tax codes (PST), among which 3 provinces, no matter whether the seller registered the provincial tax code, provincial consumption tax will be withheld and paid. The seller can check whether there is/needs to return the provincial consumption tax of PST in the corresponding province of Canadian warehousing/logistics that is double taxed.
For the sellers selling in independent stations, the sellers act as MPF service providers in the mall, and the sellers need to register the Canadian federal GST/HST tax code. Is it necessary to register four provincial tax codes?
For independent sellers
Seller friends can combine their own situation, judge whether the need to register Canadian provincial tax code.
(1) BC: If the seller has goods in stock in BC, it needs to be registered. There is no registered sales threshold requirement.
Quebec has two registration systems. The regular system applies to taxpayers with business activities or voluntary registration in Quebec and can deduct input taxes. The new system applies to non-resident taxpayers with sales in Quebec exceeding $30,000 and is not deductible.
If the seller has a commodity inventory warehouse in Quebec, it is recommended to register with the regular system so that the input tax on the warehouse costs can be deducted. Otherwise, just sign up for
(3) MB Province: Whether non-residents need to register does not depend on sales. If the seller's inventory is not placed in Manitoba, it is required to register when the following three conditions are met:
A. Promote sales in this province to obtain orders;
B. Accept orders from this province;
C. Transport goods to the province.
For non-resident sellers, the need to register with a MB provincial tax number depends on whether the seller is selling in the province to obtain an order. A website that merely has a sale will not generally be considered to be promoting in the province, although sending an advertising email will be considered promoting and will most likely require registration with the province.
(4) SK Province: there is no sales threshold. In Canada, the inventory distribution to SK Province consumers need to register for sales.
I believe that seeing here, the seller friends have a further understanding of the Canadian tax.
With the fierce competition in the European and American markets and the rapid development of the Internet in Canada in recent years, the total turnover of the Canadian e-commerce market is expected to exceed 33 billion US dollars by 2024, according to the data of Statista.