Home Jurisdiction New BC sales tax rules take effect July 1 for online marketplaces

New BC sales tax rules take effect July 1 for online marketplaces


Online marketplaces with annual gross revenues over $10,000 — hello, Facebook and Amazon — will be required to collect provincial sales tax on goods and services sold on their sites

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Starting July 1, British Columbians could pay more for the goods they buy on online marketplaces like Facebook and Amazon.

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That’s because the BC government made changes that require those online marketplaces that have annual gross revenues of more than $10,000 to collect provincial sales tax on goods and services sold on their sites. .

It shifts responsibility to companies like eBay and Amazon to collect PST, rather than small businesses that can use a marketplace facilitation site to sell their products, according to the BC Ministry of Finance.

Additionally, these marketplaces are also required by the province to charge individual sellers PST for the use of their services, such as assisting with listing sales of goods, advertising, warehousing, and collecting payment. .

This is the province’s latest initiative to create a level playing field for online operations that continue to grow their share of the economy.

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The BC government expects changes to the PST rules to generate additional revenue of $100 million this fiscal year and $120 million the following year.

The Retail Council of Canada, which has offices in British Columbia, says the decision to treat online marketplaces the same as physical stores makes sense because it puts businesses on a level playing field.

But adding PST for services purchased by sellers in British Columbia, often small businesses, will only add costs for consumers here and make local sellers uncompetitive as other jurisdictions in Canada have not introduced a similar measure, said Karl Littler, Senior Vice President. public affairs for the Retail Council of Canada.

“It doesn’t exist anywhere else. It’s a new tax between a market facilitator, like Amazon or like Best Buy or like Facebook, and someone who sells goods,” Littler said.

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The council is concerned that small BC merchants will pay 7% for these online marketplace services whether the end customer is in BC or elsewhere. This will make them less competitive with other companies operating in other North American jurisdictions.

In British Columbia, people buying goods and services from online marketplaces will have to pay PST on top of the now more expensive goods themselves, a kind of double taxation, the retail council argued.

In addition, the changes discourage market services from locating facilities, and therefore jobs, in British Columbia, the retail council says.

In a written response, Ministry of Finance officials said the application of PST to market services is trying to keep pace with the changing digital economy.

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There is no explicit breakdown of the tax on the services of online market facilitators, but in an email the ministry said it expects it to be less than 10% of the 100 million estimated additional dollars of tax revenue that will be collected.

Werner Antweiler, a professor at the University of British Columbia’s Sauder School of Business, said having online marketplaces collect PST on goods and services closes a tax loophole and helps collect the tax from overseas sellers.

What’s different about BC’s approach is the inclusion of PST on online marketplace services provided to online marketplace sellers, Antweiler said.

Other provinces or the federal government may follow suit, but this new rule may put online facilitators locating in BC at a disadvantage, as BC would have difficulty enforcing tax collection. outside its own jurisdiction, even in another province.

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“There is a compromise. While the economic rationale for taxing all services, including online marketplace services provided to sellers, is sound, BC by doing this alone puts BC at a disadvantage,” Antweiler said.

In 2020, the BC government introduced new rules that required vendors of software and telecommunications services, such as Netflix, to collect PST.

This measure was expected to generate $11 million in new tax revenue in 2020-2021 and $16 million in 2021-2022.



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