Canada sales tax compliance now supported by Taxamo

If you are a Canadian merchant selling digital goods and services in Canada you can now use Taxamo for the purposes of Canada sales tax compliance.

Mar 23, 2016

If you are a Canadian merchant selling digital goods and services in Canada you can now use Taxamo for Canada sales tax compliance.

Here at Taxamo we have had feedback from our Canadian digital service businesses that they found it difficult to comply with domestic tax reporting requirements while also complying with new global digital tax requirements.

Taxamo has launched support of Canadian sales tax compliance for our businesses who have a Canadian domestic reporting requirement. We have done this so these businesses can now easily support both domestic and international digital tax reporting requirements.

Canada sales tax compliance support a natural step

Taxamo CEO John McCarthy expressed his delighted with this expansion of Taxamo’s service: “This is a natural next step for Taxamo, following as it does from our recently revealed support for U.S. sales and use tax for those of our businesses who have a US reporting requirement. It is Taxamo’s mission to support digital businesses wherever they do business. It is because of this commitment that we have now added Canada to our rapidly evolving portfolio of supported tax jurisdictions.”

Since January 2015, when we launched our flagship support for the 2015 EU VAT rules, the Taxamo solution has grown rapidly. In the intervening months we have added support for South African VAT, Japanese consumption tax, Norwegian VAT, and U.S. sales and use tax. In addition our support for South Korea, Switzerland, and Iceland is due to launch in the coming months.

Our support for Canadian digital tax will also be of particular interest to eCommerce platforms which may have an EU reporting requirement under the 2015 EU VAT digital tax rules, but who may not have not themselves have a tax reporting requirement in Canada.

Very often their Canadian customers have a reporting requirement in Canada and platforms need to provide sufficient data and consumer engagement to enable their Canadian customers to comply with Canadian tax rules. This can be difficult considering the particular requirements of Canadian taxes.

If you have a establishment in Canada supplying digital goods and services to Canada-based consumers then you can now use the Taxamo sales tax compliance solution.

How does Taxamo’s solution work?

So, what do you get with our solution?

Taxamo has developed a fully compliant digital tax solution that satisfies requirements in all regions. Once integrated with Taxamo, a digital service merchant meets all requirements of international digital tax regulations on tax calculation, reporting and invoicing.

Taxamo’s technical foundation is structured around an API used to detect a customer’s country of residence through a number of country evidence types including:

  • Credit card BIN
  • Billing country code
  • IP address geolocation
  • Additional ‘commercially relevant’ information,
  • Mobile phone number / SMS Verification
  • VAT identification number

The Taxamo solution now also provides the following features:

  • Tax reporting for filing of Canadian GST/HST, PST, QST returns
  • Evidence collection for tax audits
  • Threshold Monitoring
  • Compliant Canadian invoicing

In Canada GST/HST registrants, or businesses required to have a GST/HST registration number, must charge and account for the GST on taxable supplies (other than zero-rated supplies) of goods and services made in Canada.

Where GST/HST registrants make taxable supplies in a participating province, they must charge and account for the GST/HST. GST/HST is applied on B2B and B2C sales.

Canada sales tax compliance support with a global context

The broader international context to Taxamo supporting Canada sales tax is that moves are afoot to change how GST/VAT systems operate. The change is specifically related to the taxation of the digital economy. This challenge was action 1 in the Organisation for Economic Co-Operation and Development’s (OECD) recent Base Erosion and Profit-Shifting (BEPS) report.

The BEPS report states that the principle of taxing the digital economy is to “ensure that profits are taxed where economic activities generating the profits are performed and where value is created.”

Canada sales tax compliance

Consumption taxes are evolving across the globe as tax jurisdictions look more favourably on indirect taxation to raise much-needed revenue.

This global context is extremely important when it comes to compliance with Canadian sales tax. A sales threshold of CAD$30,000 exists, however it takes into account a merchant’s global sales. Therefore if a domestic merchant’s worldwide sales are over CAD$30,000 then sales tax (GST/HST) will apply to this merchant’s sales in Canada.

GST stands for goods and services tax, while HST represents harmonized sales tax. Combined, these tax rates form the Canadian sales tax system. However, there are also additional regional sales taxes such as QST (Quebec Sales Tax) and PST (provincial sales tax).

Taxamo provides an end-to-end compliance solution that enables businesses to comply with a new wave of regulatory obligations. Our solution allows for real-time tax calculation, evidence collection, tax return data and audit reports, with minimal impact on the customer journey.

The information contained in this publication (“Information”) has been provided to you for general information purposes only and we recommend that you obtain professional advice before acting or refraining from action as a result of the Information. Taxamo accepts no liability for any loss occasioned to any person acting or refraining from action as a result of the Information.