{"id":2424,"date":"2022-05-13T13:48:45","date_gmt":"2022-05-13T20:48:45","guid":{"rendered":"https:\/\/www.thor.ca\/blog\/?p=2424"},"modified":"2022-05-13T13:48:45","modified_gmt":"2022-05-13T20:48:45","slug":"warning-bc-pst-on-marketplace-services-new-tax-on-sellers","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2022\/05\/warning-bc-pst-on-marketplace-services-new-tax-on-sellers\/","title":{"rendered":"Warning \u2013 BC PST on Marketplace Services \u2013 New Tax on Sellers"},"content":{"rendered":"

British Columbia is the last province in Canada to introduce marketplace facilitator rules that will require online marketplace facilitators<\/em> rather than sellers to collect BC PST on sales made through the marketplace.\u00a0 The proposed legislation is to come into force on July 1, 2022.<\/p>\n

However, British Columbia is unique in making virtually all fees between marketplace facilitators and sellers taxable. Starting on July 1st<\/sup>, tax will apply to online marketplace services<\/em> provided by the marketplace facilitator or associated entities in connection with sales made through an online marketplace.<\/p>\n

The term \u201conline marketplace service<\/em>\u201d is broadly defined to include services such as listing, advertising, customer service, storage, fulfillment of orders or bookings, collecting payment and other services provided by an online marketplace facilitator<\/em> or an agent, partner, joint venturer or associated corporation of the marketplace facilitator to an online marketplace seller<\/em>.<\/p>\n

Under the proposed charging section, online marketplace services<\/em> will be taxable if they are:<\/p>\n

    \n
  1. provided in British Columbia or in respect of accommodation in British Columbia; or<\/li>\n
  2. provided to a person in British Columbia if the service relates to a sale of products or services for use or consumption in British Columbia.<\/li>\n<\/ol>\n

    Notwithstanding that the changes are touted as being to \u2018level the playing field with brick-and- mortar businesses\u2019, the same services, such as storage, order fulfillment, and advertising are not taxable for sellers who are not online marketplace sellers<\/em>. Accordingly, retailers selling through brick-and-mortar stores or through their own websites will not pay tax on their purchases of the same types of services. In addition, online marketplace sellers<\/em> in British Columbia will pay more tax than their competitors who are not in the province on services provided outside of the province. Online marketplace sellers<\/em> will be required to self-assess the tax if it is not collected by the service provider.<\/p>\n

    The proposed legislation poses several challenges, including but not limited to the following.<\/p>\n

      \n
    • The tax will apply to services that relate to exempt sales of goods and services, such as food, children\u2019s clothing, and restaurant meals, when sold through certain online marketplaces.<\/li>\n
    • If the seller is registered for GST\/HST, many of the online marketplace services<\/em> may be subject to GST\/HST as well as BC PST. For example, a seller based in Ontario will be required to pay 20% on listing services provided in BC even if the related sale is to a customer in Alberta (13% GST\/HST plus 7% BC PST).<\/li>\n
    • Determining the application of the tax can be difficult. For example, it is not clear where electronically supplied services are being provided or how tax would apply to a charge for storing goods outside of BC if the charge is not collected at the time of sale.<\/li>\n
    • For services provided outside of BC, the tax applies if the online marketplace seller<\/em> is a person in the province which leads to the question as to how the tax will apply to sellers who carry on business in multiple provinces.<\/li>\n<\/ul>\n

      Thus, notwithstanding that the BC budget documents refer to purchasers not paying any more PST, this will only be true if online marketplace sellers <\/em>do not increase their prices to recover the additional PST they will be paying. \u00a0The decision to levy a new tax on local sellers, particularly on small and medium-sized businesses that are struggling to survive, is surprising.<\/p>\n","protected":false},"excerpt":{"rendered":"

      British Columbia is the last province in Canada to introduce marketplace facilitator rules that will require online marketplace facilitators<\/em> rather than sellers to collect BC PST on sales made through the marketplace.\u00a0 The proposed legislation is to come into force…<\/p>\n","protected":false},"author":23,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21,42],"tags":[],"class_list":["post-2424","post","type-post","status-publish","format-standard","hentry","category-provincial-tax","category-sales-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/2424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=2424"}],"version-history":[{"count":3,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/2424\/revisions"}],"predecessor-version":[{"id":2427,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/2424\/revisions\/2427"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=2424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=2424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=2424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}