CHPC Committee Report

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

PDF

APPENDIX B: JURISDICTIONS WITH SALES TAX ON FOREIGN E-COMMERCE CURRENTLY IN FORCE[1]

Jurisdiction	Synposis	In-Force Date
Albania	Digital services supplied by nonresident business to consumers subject to Value-Added Tax (VAT).[2]	January 1, 2015
European Union	Where digital services are supplied on a business to consumer (B2C) basis, the supplier is held accountable for VAT in the consumer’s state. Rule applies to all 28 EU Member States: Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and United Kingdom	January 1, 2015
Japan	Imposes the consumption tax of 8% on electronic services offered by offshore providers. Provision of digital service (e.g., e-books, internet-delivery of music, advertisement, etc.) provided by a foreign person to Japanese customers will be subject to consumption tax. For B2C transaction, the foreign service provider will be required to register as a taxable entity and file consumption tax returns.[3]	October 1, 2015
New Zealand	An operator of an electronic marketplace would be required to register and return Goods and Services Tax (GST) (15%) on supplies of remote services and intangibles made through the marketplace.[4]	October 1, 2016
Norway	Purchases of electronic services from abroad by consumers in Norway are subject to VAT at the standard rate of 25%.[5]	July 1, 2011
OECD	The OECD International VAT/GST Guidelines included recommended rules for the collection of VAT on cross-border services, including Internet downloads, to private consumers. The Guidelines recommended that foreign sellers register and remit tax on the sales of e-books, apps, music, videos and other digital goods in the jurisdiction where the final consumer is located.[6]	November 6, 2015
South Africa	Nonresidents who supply electronic services to recipients in South Africa will be required to register for VAT and charge South African VAT. The rate of VAT in South Africa is 14%.[7]	April 1,2015
South Korea	VAT rate of 10% is applied to purchase of digital services from non-resident providers.[8]	July 1, 2015
Tanzania	Nonresident suppliers of B2C e-services required to register for VAT.[9]	July 1, 2015

Source: Canadian Wireless Telecommunications Association, Complementary document sent to the Standing Committee on Canadien Heritage, 5 December 2016.

[1] The U.S. does not require foreign e-commerce providers to charge sales tax at this time but a number of States have enacted legislation to ensure that out-of-state e-commerce suppliers charge the sales tax applicable in the state where the customer resides. These States include: Arkansas, California, Connecticut, Georgia, Kansas, Louisiana, Maine, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, Tennessee, Vermont, and Washington.

[2] http://www.ey.com/gl/en/services/tax/international-tax/alert--albania-enacts-new-vat-law

[3] http://www.ey.com/gl/en/services/tax/international-tax/alert--japan-enacts-2015-tax-reform-bill

[4] https://taxpolicy.ird.govt.nz/sites/default/files/2016-sr-gst-cross-border-supplies.pdf

[5] http://www.skatteetaten.no/en/voesnorway/About/

[6] Please see: OECD International VAT/GST Guidelines. The OECD has 35 member countries: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Latvia, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, and United States. Out of the 35 members, only Canada, Chile, Mexico, Switzerland, and Turkey have not shown indications of implementing the collection of sales tax on foreign e-commerce.

[7] http://www.ey.com/gl/en/services/tax/international-tax/alert--south-africa-requires-vat-registration-for-nonresidents-who-supply-electronic-services

[8] http://ebiz.pwc.com/2015/05/south-korea-vat-on-electronic-service-provided-by-foreign-entities-changes-as-of-1-july-2015/

[9] http://www.ey.com/gl/en/services/tax/international-tax/alert--tanzanias-new-vat-act-is-effective-on-1-july-2015