International VAT Guides Canada – British Columbia

GST Framework Canada

The indirect tax framework incorporated in Canada is unquestionably more complicated than the VAT regimes in Europe. The GST Canada taxability rules are based on imposing the federal and provincial sales tax. 

The 5% federal Goods and Services Tax (GST) is charged at the federal level. The federal GST is applied to most taxable goods and services that aren’t zero-rated or exclusively tax-exempt. 

Canada is organized into provinces and territories from a territorial and fiscal perspective. Most provinces have implemented provincial sales taxes (PSTs), but only six have access to the Harmonized Sales Tax (HST) framework. 

Harmonized sales tax provinces have unified their taxability rules with those of the federal government of Canada. From a practical perspective, one GST/HST registration covers return filings and remittance procedures. The combined tax rate (sum of GST+PST) is applied to the whole taxable amount at the time of supply. 

The reporting rules and taxability rules are uniform. However, the combined tax rates are different; they vary between provinces. 

However, to “make” the Canadian indirect tax system a bit complicated, a few provinces collect the provincial sales tax (PST) separately. This means that in the cases where the place of supply is established to be within one of these provinces, the local rules and regulations should be followed in addition to the federal ones. 

The vendors that make their taxable supplies to customers based in Manitoba, British Columbia, Saskatchewan, and Quebec should be aware of the local sales tax rules. The provincial requirements define when the vendors established in the respective provinces, within Canada or outside Canada, who make their supplies to local customers are obligated to register, collect, and remit provincial sales tax. 

British Columbia belongs to the group of provinces that haven’t accessed to the harmonized sales tax framework. Provincial sales tax requirements should be reviewed and followed by all vendors that make their taxable supplies available to customers in this province. 

These requirements start from the specific registration requirements, taxability rules, tax rates, and tax rules for businesses established in the provinces or outside the province but within Canada and the businesses whose business is outside Canada. 

A critical difference between BC PST and GST/HST is that for business purchases, on most occasions, the PST-registered business buyer cannot reclaim PST paid on its business acquisitions. This is a noteworthy differentiation between the VAT regime and B.C. PST chargeability. 

British Columbia Provincial Sales Tax 

The provincial sales tax is 7% in British Columbia – the B.C. PST applies to taxable supplies of goods and services that are purchased in B.C. or transferred into B.C. for use or consumption. 

The B.C. Provincial Sales Tax Act and Provincial Sales Tax Regulation are the two most important pieces of legislation upon which the British Columbia PST is based. The federal GST applies to most taxable supplies consumed or used in the province. 

The rules  British Columbia GST and PST rules indicate that most of the tangible personal property that has its place of supply in the province is part of the taxability framework for local PST. The scope of the taxable services has been expanded since the introduction of the amendment to the Sales Tax Regulation, which came into force on July 1, 2023.  

British Columbia PST

Provincial Sales Tax (PST) in B.C. is a retail sale tax (transactional) tax levied for purchasing taxable goods and services bought for personal or business use. 

Businesses whose place of economic activity is within the province, outside the province but within Canada, or outside Canada and that make retail sales of taxable goods and services to customers residing there should familiarize themselves with the B.C. PST rules and regulations are in force.

GST in British Columbia should be charged according to federal rules. Before charging the federal GST, the taxable person previously registered only for B.C. PST should be familiar with the GST requirements, i.e., registration and reporting rules. 

GST in British Columbia rules and regulations emphasize that this province has its own PST system in place and that taxable persons should get familiar with two separate consumption tax frameworks, one implemented at the federal level and one at the provincial level. 

British Columbia GST rules concerning the registration threshold are the same as the ones applicable across Canada. According to the Goods and Services Tax Act, Businesses with a worldwide turnover of taxable supplies above CAD 30,000 should register for GST/HST. 

How much is GST in British Columbia, and PST? 

GST rate British Columbia: British Columbia GST is 5%, like in the rest of Canada. Some supplies are tax-exempt. The PST in British Columbia is 6%. 

PST threshold in Canada

The Excise Tax Act (in part nine) defines the framework for the applicability of the Goods and Services Tax in Canada. The rules state that any person carrying on a business activity in Canada with an annual GST threshold above CAD 30,000 should register for GST/HST before making any taxable sales in the province. The GST threshold in British Columbia follows the federal rules. 

British Columbia Provincial Sales Tax Act indicates that any economic operator that surpasses the small B.C. trader threshold of CAD 10,000 should register for British Columbia PST. 

It should be emphasized one more time for foreign businesses that registration rules for PST and GST are different procedures, and the first doesn’t always include the mandate to register for the other. The registration for PST is under the monitoring rules of the Ministry of Finance of B.C., while the registration, collection, and other requirements related to GST/HST are under the supervision of the Canada Revenue Agency.

PST registration threshold for resident businesses: domestic businesses or businesses that carry on business activity in British Columbia could use the small business scheme to remain outside the scope of the PST.

PST registration threshold for non-resident businesses: CAD 10 000.

PST registration threshold for foreign providers of digital services: CAD 10 000.

PST Taxable Activities in British Columbia

Types of taxable activities that mandate the PST registration:

• Supply of goods and services for consideration;
• Imports of goods and service;
• Online marketplace services;
• Accommodation Services;
• Services related to taxable goods.

Tax Representative in British Columbia 

Non-resident providers of digital services or products generally don’t need to appoint a local tax representative to fulfill their PST compliance responsibilities.

Tax registration 

General Registration Regime

The PST registration rules indicate what groups of businesses should register for PST when providing taxable supplies. These rules are structured to address different groups of taxable persons, and a principal distinction parameter is the vendor’s location or the business model. 

Separated rules are accommodated to address vendors that have their place of business in B.C., outside B.C., but in Canada outside Canada – the B.C. Sales Tax Act also provides distinct registration and reporting rules for accommodation providers, online marketplaces, and marketplace sellers. 

The PST framework indicates that any business that carries on economic activity in B.C. should register for PST when performing any of the below-mentioned activities when the place of supply(PoS) is considered to be in B.C.:

• Selling or leasing of taxable goods; 
• Provision of services related to taxable goods; 
• Provision of software;
• Provisions of legal services;
• Provision of online marketplace services;
• Provision of accommodation services. 

Vendors that cannot access the small business scheme and sell or make taxable supplies in British Columbia to customers who acquire these goods or services for personal consumption should register with the British Columbia Ministry of Finance, collect PST, and file the PST return.

PST on Electronically Supplied Services 

Non-resident providers of digital services(digital service providers) or digital marketplace facilitators are obligated to register to collect and remit PST for the supplies of taxable digital services when the place of supply is determined to be in British Columbia. 

The B.C. Sales Tax Act and Regulation specifically indicates the taxability rules for providing digital services by local and foreign providers. For most supplies of taxable digital services or digital goods, the general PST rate of 7% is applicable. 

Providers of digital services and digital tangible personal property that make these supplies available to customers residing in the province should register for PST and levy PST at 6% for their taxable supplies. 

Compared with the indirect tax framework for non-resident providers of digital services or products, the British Columbia PST rules are broad. The scope of PST includes non-resident providers of digital services, most electronic distribution platforms (that enable or facilitate the supplies of digital goods or services), online accommodation platforms, and marketplace facilitators (enablers or facilitators of concerned supply).

How much is GST in British Columbia for cross-border digital services?

British Columbia GST rate: The British Columbia GST rate for the supply of intangible goods or digital services is 5%. 

How much is PST in British Columbia for cross-border digital services?

British Columbia PST rate: 7%.

Digital Platform Operators Rules 

Non-resident marketplace facilitators that surpass the PST threshold are obligated to register to collect and remit PST on behalf of marketplace sellers, that provide goods and services to customers based in British Columbia. 

It should be noted that not all marketplace facilitators are obligated to register for PST when marketplace sellers provide goods or services to customers based in B.C. 

The online marketplace facilitator that facilitates the supply of the following goods or services to customers based in B.C. is obligated to register to collect PST on behalf of marketplace sellers: 

• Goods that, at the time of sale are located within Canada and are sold to a local customer;
• Supply of the software for use on or with an electronic device located in B.C.;
•  Provision of accommodation services for the property located in B.C.;
• Or taxable services, other than accommodation, to a person in B.C.
  

Non-resident marketplace facilitators, operators of electronic distribution platforms, and online accommodation platforms are obligated to register, charge, collect, and remit PST for direct supplies as well as supplies of taxable goods and services that they enable to be carried on through their platform by the marketplace vendors or providers of services to the customer based in British Columbia. 

Providing online marketplace services to digital platform users should in most cases, be taxable under the PST rules.

Invoicing Rules

General invoicing rules are accepted on the federal level, considering the content of the invoice also extends to the GST British Columbia framework. Depending on the type of taxable transaction, some additional fields should be added according to the PST rules. 

Invoice Requirements in British Columbia 

The pdf invoice should at least contain the following:

General information: 

• Date of invoice issuance; 
• Date and time of supply;
• Unique invoice number from consecutive series.

Seller information:

• Company name;
• Full address (head office);
• Billing address if different from company address;
•  PST number.

Customer information:

• Name; 
• Full address;
• PST number (if applicable).

Fiscal Information:

• Tax amount for each type of goods or services supplied;
• Federal Tax Rate – when applicable;
• PST tax rate;
• Type of the transaction by reference to the categories indicated in the GST rules;
• Total PST amount;
• Invoice Total tax exclusive;
• Rate of any discount;
• Total invoice amount. 

Foreign Currency Invoice in British Columbia

In most cases, the invoice should be issued in national currency. When permitted to be issued in foreign currency, the GST/HST, total, and price of goods/services should be indicated in local currency.  

PST return 

Standard Return 

Suppliers of taxable goods or services are required to register for PST following the alternative registration routes and file a tax return on a monthly, quarterly,, semi-annual, or annual basis, depending on the amount of tax collected or payable. The filling frequency is based on PST collectible yearly:  

• Monthly reporting – above CAD 12,000;
• Monthly or Quarterly reporting – CAD 6,000 – 12, 000;
• Quarterly or Semi-annually reporting- CAD 3,000 – 6, 000 and;
• Quarterly, Semi-Annual, or Annual reporting – below CAD 3,000.

After the responsible department of British Columbia’s Ministry of Finance processes the PST registration of the taxpayers, it will assign an ongoing reporting period that starts from the first day of the indicated month.

The mandated reporting period is monthly for the taxable persons who should have been registered but didn’t register.

The due date for submission of the PST return and payment of owed tax should be received on or before the last day of the month following the reporting period. 

PST reporting for non-resident digital suppliers

Penalties for late reporting and omitted declarations 

The Ministry of Finance of British Columbia administers the PST. For the following reasons concerning PST-non-compliance, the taxable persons could face penalties and interest: 

• Late filing;
• Late PST Registration;
• Submission of return in a manner different than indicated (in paper instead of electronically);
• Repeatedly failing to file a tax return on time;
• Failing to provide the  required information in return or records needed with a return; 
• Failing to provide information or records (e.g., failing to file an online marketplace facilitator’s annual information return for PST).

Non-resident vendors that don’t respect the prescribed reporting deadlines for submission of tax returns and due dates for payment will most likely be exposed to tax audits, which could result in payment of penalties and interest above the tax payable.

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