Canada: New Rules for Digital Service Providers Starting July 2021

The new rules for digital service providers outside Canada were announced in November 2020. These companies must now ensure their tax compliance with the new requirements as the deadline is shortly approaching and the rules will be officially in place by July 1st.

In the past foreign sellers of digital products or services to Canadian consumers did not have to collect and report GST which left local sellers with a disadvantage in terms of pricing.  The new regulations are set in order to combat and rectify this discrepancy by creating a framework for fair competition while governing the operation of Canada’s digital economy.

Who will be affected?

Non resident sellers of digital products or services will be required to register under the normal GST/HST rules and to collect and remit the GST/HST in respect of sales of services provided.

Accommodation platforms

The GST/HST would be required to be collected and remitted on short-term accommodation supplied in Canada through an accommodation platform by either the property owner or the accommodation platform operator.

All the above mentioned companies only have now two months to prepare as an interpretation of what how these rules affect each specific business is needed in order to adjust their tax processes and eventually their tax compliance.

Global VAT Compliance has experience in Digital Services Tax Compliance and can help you with all of your GST obligations in Canada and internationally. Click below to schedule your assessment today.