Effective July 1, 2020, the Province of British Columbia (B.C.) will expand the Provincial Sales Tax (PST) registration requirements for businesses that are non-residents of B.C. The new registration requirements will affect Canadian sellers of goods to customers in B.C. as well as both Canadian and foreign sellers of software and telecommunication services where the B.C. revenue exceeds $10,000 per year. Prior to these changes, a non-resident of B.C. was only required to register and collect B.C. Sales Tax if they were actively soliciting customers in B.C. and, in the case of the sale of software or telecommunication services, the vendor was located in Canada.
With this change, B.C. joins Saskatchewan and Quebec as Canadian jurisdictions that have applied PST to such services in the digital economy. As consumers continue to purchase goods and services online from suppliers without a physical presence in the taxing jurisdiction, we have noted a global increase in the registration requirements for non-residents selling into foreign jurisdictions.
The B.C. change was announced on February 18, 2020 when the B.C. Finance Minster delivered the province’s 2020 budget. As the legislation has not yet been tabled it is unclear what will qualify as “specified” B.C. revenues.
While a wide range of popular online media services, including video platforms such as Netflix, and Amazon Prime as well as music platforms such as Google Music, will be subject to the B.C. PST on July 1, 2020, these changes may also trigger B.C. PST registration requirements for Canadian and foreign sellers of Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS) to purchasers in BC.
Stay tuned. We will provide more insight into this matter after the related legislation becomes available.