British Columbia Adopts Provincial Sales Tax Requirements for Canadian Remote Sales and Foreign Software

A series of rules originally passed by the parliament of British Columbia in February 2020 that imposed Provincial Sales Tax collection requirements on businesses located outside of the province have come into effect as of April 1, 2021. The rules were originally passed with an effective date of July 1, 2020, but the implementation was postponed as part of Covid-19 relief measures. The updated date by which businesses were required to register was announced in September 2020.

The new rules effective April 1, 2021, require businesses located outside of British Columbia but within Canada to register if they meet all of the following requirements:

  • Sell taxable goods to customers in BC
  • Accept orders from customers located in BC
  • Deliver goods (including through a common carrier) to customers in BC.
  • Meet the minimum threshold of $10,000 worth of gross revenue in 12 months from retail sales of goods, software, and telecommunication services to customers in BC, or meet the same threshold in 12 months with all sales of software and telecommunication services.

The above rules do not apply to businesses located outside of Canada. All sellers of vapor products and accessories to BC customers are required to be registered.

Businesses located both inside and outside of Canada are required to register under the new rules if they meet all of the following requirements:

  • Sell taxable software for use or telecommunications services to customers in BC
  • Accept orders for software for use or telecommunications services from customers in BC
  • Meet the minimum threshold of $10,000 worth of gross revenue from all sales of software and telecommunications services to BC customers

Where a business is located for the application of these rules is determined based on the presence of a company’s place of business, rented or owned real property, employees, agents, or management in either British Columbia or Canada. Wholesalers, businesses making only nontaxable sales, small sellers, and independent sales contractors are not required to register.

Canada and its provinces face the same issues as many other national, state, and provincial governments when it comes to collecting their consumption taxes in an increasingly global digital market. New registration requirements being adopted in Canada and the EU can cause trouble for sellers of software and digital goods. Keeping a handle on the complexities of changing laws across the world is a must as more governments pass legislation imposing taxes on foreign remote sellers. (British Columbia Provincial Sales Tax Bulletin 001, Revised February 18, 2021).

Posted on July 26, 2021