International VAT Guides Canada – Manitoba

GST Framework Canada

Canada has a very particular indirect tax regime compared to the countries that have implemented VAT. The structure of the system, its most important elements, such as registration requirements, thresholds, charging, collecting, and remittance of its “sort” of sales tax is in some parts similar to generally accepted VAT rules from one part and from the other to the concept of the Sales and Use tax in the US.

Canada has a nationally recognized and imposed federal Goods and Services Tax (GST). This consumption tax is unilaterally adopted by all provinces and territories at the same rate of 5%. It is applied at each level in the production and distribution chain. 

Five provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) have harmonized the provincial sales tax (PST) with the Federal GST. The merging of these two types of taxes(looked from the perspective of territory that mandates it), is called Harmonized Sales Tax (HST).

Harmonized Sales Tax makes the calculation, remittance, registration, and other tax compliance duties less complicated than in other Canadian provinces with separate rules for their provincial sales tax. Provinces that haven’t signed the agreement for the introduction of HST. 

There is no differentiation in registration, collection, and remittance in these provinces between the federal part of the GST and provincial sales tax. One registration covers all provinces that have HST in place.  

The provinces that haven’t accessed the agreement establishing the adoption of HST are British Columbia, Manitoba, and Saskatchewan; each levy their own distinct sales tax and national GST.

In these provinces, the provincial tax authority has jurisdiction over collecting PST. The curious fact is that PST-registered businesses in these provinces cannot reclaim the PST paid on their purchases(except in specific cases), even if the taxable good/service is used during business. 

The PST in Manitoba is called the Retail Sales Tax (RST). The RST is applied to the retail sale or rental of most goods and some services. The correct way to calculate the RST is first to levy the RST on the taxable amount and then to impose federal GST. 

Manitoba Retail Sales Tax 

The Retail Sales Tax Act defines that the retail purchases or lease of goods or services for personal use in Manitoba are subject to an RST rate of 7%, whether the goods or services are local or foreign purchases, but if they are used or consumed in the province. 

To emphasize, the province of Manitoba has a Manitoba RST imposed on the level of provincial sales. The Manitoba RST should be levied on the taxable supplies of goods or services that have a place of supply in Manitoba if treated as taxable under the Manitoba Retail Sales Act.

When these conditions are met, the RST registrants, or those that should be registered, should collect RST on these taxable supplies. 

Manitoba GST

As previously mentioned, the Manitoba GST rules state that GST in Manitoba is levied only, after the RST has been calculated on the taxable amount. GST in Manitoba tax provisions underlying that local RST is levied on almost all sales of tangible personal property and some services. 

In the situation where the service isn’t mentioned explicitly in the RST Act as taxable or exempt, and if it is purchased together with a taxable good or service or in connection with them, the taxable amount of this service also becomes part of the purchase price of the taxable goods or services, and this part is also taxable.

Generally, all goods that aren’t exempt from RST are taxable. 

How much is GST in Manitoba, and PST? 

GST rate Manitoba: Manitoba GST is 5%, like in the rest of Canada. Some supplies are tax-exempt. The PST in Manitoba, better known as RST, is 7%. 

RST threshold in Canada

The Retail Sales Tax Act and accompanying notices define that any person carrying on a business activity in Manitoba with annual taxable sales above CAD 30,000 should register for RST before making any taxable sales in the province. 

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

RST registration threshold for non-resident businesses: Non-resident businesses that don’t carry over a business in Manitoba or that don’t have a permanent establishment in the country don’t have any threshold.

RST registration threshold for foreign providers of digital services: No threshold.

RST Taxable Activities in Manitoba

Types of taxable activities that mandate the RST registration:

• Supply of goods and services for consideration;
• Imports of goods and services; 
• Supply of defined digital services. 

Tax Representative in Manitoba 

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

Tax registration 

General Registration Regime

Suppliers that cannot access the small business scheme and sell or make taxable supplies in Manitoba to customers who acquire these goods or services for personal consumption should register with Manitoba Finance, collect RST, and file the RST return.

Simplified tax registration 

Foreign businesses that sell or lease taxable goods to Manitoba buyers who acquire this tangible personal property to be used or consumed in the province should register for RST and collect RST. 

Streaming service providers and other vendors of media content should register as a vendor and collect and remit RST on their sales to Manitoba customers.

RST on Electronically Supplied Services 

Digital Services

Nonresident or resident digital service providers that provide taxable digital services are obligated to register, collect, and remit RST to Manitoba Finance. 

Streaming service providers and other vendors of media content should register as vendors and collect and remit RST on their sales to Manitoba customers.

The digital suppliers whose place of business is outside Canada are mandated to register for RST under the specified RST regime when the conditions are met, i.e., when the threshold is reached. 

Digital platform operators registered under the specified RST regime should collect and remit RST that suppliers not registered under general RST make to Manitoba customers.

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

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

How much is RST in Manitoba for cross-border digital services?

Manitoba RST rate: 7%.

Taxable Digital Services in Manitoba

Non-resident streaming service providers and other media content suppliers should register as vendors and collect and remit RST to the Manitoba Finance Authority for their supplies. 

Suppliers outside Manitoba should register electronically before they commence with their supplies of taxable digital services. The following represent some of the examples of taxable digital services under the RST regime: 

Streaming services provided under a subscription-based concept (audio, video). 

Digital Platform Operators Rules

Online sales platform operators should register for RST when they facilitate or make the direct supply of taxable goods or services and collect the payment on behalf of an online vendor.

RST applies to all taxable retail sales made through online sales platforms.

Invoicing Rules

The general GST Manitoba and RST rules should be followed when non-resident providers of digital services or platform operators (when the terms are met) issue an invoice or receipt to the recipient of a digital service/product based in the country.

Invoice Requirements in Canada 

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;
•  RST number.

Customer information:

• Name; 
• Full address;
• RST number (if applicable);

Fiscal Information:

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

Foreign Currency Invoice in Manitoba

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.  

RST return 

Standard Return 

Suppliers should file a tax return and remit tax payable to Manitoba Finance. This can be done electronically or by printed pdf depending on the filing frequency.  

The tax return filing frequency depends on the average monthly RST collectible: 

• $5,000 or more – monthly; 

• $500 to $4,999 – quarterly;

 • Less than $500 – annually. 

Monthly RST tax returns and payments should be completed using TAXcess, Manitoba Finance’s online system.

RST reporting for non-resident digital suppliers

Penalties for late reporting and omitted declarations 

Fines and penalties according to Manitoba Sales Tax rules:

Taxable persons registered for RST should be aware of the following penalties if they fail to remit or pay RST by the following deadlines:

Late-filed returns are subject to a penalty of 10% of the tax payable. Interest is charged on all outstanding debts. 

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