As a cross-border e-commerce business selling in Canada, you are required to comply with Canadian tax laws and register to pay taxes to the Canadian government according to the relevant regulations. Sheng Qian Professional Corp. has years of experience assisting cross-border e-commerce businesses, with clients including but not limited to large e-commerce platforms such as Amazon, Shopify, Etsy, and more.
Common taxes involved:Sales Tax
Regardless of whether the cross-border e-commerce business is based in Canada, if the sales of goods/services to Canada exceed CAD 30,000 in total over four consecutive quarters, you must register for a federal sales tax account (GST/HST account). If the consumer's location is in British Columbia (BC), Manitoba (MB), Quebec (QC), or Saskatchewan (SK), you will also need to register for a provincial sales tax account (PST/QST).
Marketplace platforms may collect GST/HST on some sales on your behalf (for example, goods shipped from a fulfilment warehouse in Canada), and since 2024 platforms report sellers' information to the CRA — so it is important that your own registration and filings are in order.
Once registered for the sales tax account, the e-commerce business is authorized to collect the appropriate sales tax from consumers and remit it to the government regularly. Additionally, the sales tax paid on goods imported into Canada can be refunded by the government.
If you fail to register and remit the sales tax as required, the Canada Revenue Agency (CRA) will force the registration of your sales tax account and calculate the taxes and penalties owed based on your e-commerce sales. Since the sales tax was not collected from consumers previously, you, the e-commerce business, will be responsible for paying it.
Income Tax
Under Canada's tax treaties (with countries such as China, the UK, the US and many others), if a non-resident business/individual has a permanent establishment in Canada, they are required to pay business income tax on the profits generated by that permanent establishment.
For more detailed information on the taxes cross-border e-commerce businesses may face in Canada, feel free to contact us.