In the wake of the COVID-19 crisis, the Government of Saskatchewan has tabled Bill 211 - An Act to amend The Provincial Sales Tax Act ("Bill 211"), which broadens the application of the Saskatchewan provincial sales tax ("PST") by enacting new registration and collection requirements for e-commerce platforms. Within less than three weeks of its introduction and first reading, Bill 211 received royal assent on July 3, 2020. It is important to note that these new rules apply with a retroactive effect to January 1, 2020.
Essentially, under the new rules, operators of "electronic distribution platforms",1 "online accommodation platforms"2, and "marketplace facilitators"3 may now be required to register as "vendors" for purposes of collecting and remitting the applicable PST on sales generated through their platforms to consumers or users in Saskatchewan. This is the case whether they are regarded as carrying on business in Saskatchewan or not for PST purposes.
A "marketplace facilitator" would qualify as a "vendor" under the proposed expanded definition of such term pursuant to the Provincial Sales Tax Act ("Act") if it operates or facilitates a marketplace for taxable retail sales in Saskatchewan by "marketplace sellers"4, and, directly or indirectly, collects payment from consumers or users and remits such payments to the marketplace sellers.
Similar rules apply to "online accommodation platform" operators. Operators of such platforms may be required to register as "vendors" for purposes of collecting and remitting the applicable PST on sales generated through their platforms. Such obligations accrue to the operators of these platforms if they operate or facilitate a marketplace in which the provider of "accommodation services"5 in Saskatchewan and the consumer of those services are brought together, and if the operator collects payments from the consumers of such services and remits the payments to the suppliers of the services.
Bill 211 also aims to expand its list of "taxable services" to cover electronic distribution services that are delivered, streamed, or accessed through an "electronic distribution platform".6 The expression "electronic distribution services" covers content delivered through the electronic distribution platform, and any associated or incidental services, including all transactions services, processing services, and administration services.
It is noteworthy that these new rules are part of a broader trend to tax digital platforms, and impose registration and collection obligations to such platforms across the world and in Canada as well. These rules are in fact similar to those recently adopted in Québec for Québec sales tax purposes regarding supplies made to Québec consumers by foreign suppliers and operators of digital accommodation platforms. Further details on these rules can be found here.
The objective of these new rules is most likely to pass on the burden to account for the collection and remittance of the PST onto web and e-commerce platform operators. However, only limited administrative guidance has been issued by the Saskatchewan Ministry of Finance in connection with these rules7, and businesses that may be targeted by such rules may require further guidance and clarifications, including on the transitional rules for the application of the new measures as of January 1, 2020. Taxation of web and e-commerce platforms in Canada is rapidly evolving and operators of these platforms should carefully monitor, review and consider their registration and collection obligations in connection with their activities in Saskatchewan, and more broadly in Canada in general.
1. Defined as a website, internet, portal, gateway, application or other means prescribed in the regulations that allow a consumer or user to purchase at a retail sale, whether singly, by subscription or in any other manner, including maintenance, updates and support, tangible personal property, services or contracts of insurance that are delivered through an electronic format.
2. Defined as an electronic marketplace that enables or facilitates transactions in relation to accommodation services located in Saskatchewan.
3. Means a person (i) that makes or facilitates a marketplace for retail sales by marketplace sellers, and (ii) that, directly or indirectly, collects payment from a consumer or user and remits payment to a marketplace seller, whether or not that person receives consideration in exchange for its services.
4. Defined as a person that makes retail sales through any physical or electronic marketplace operated, owned or controlled by a marketplace facilitator.
5. Such term is now covered as a "taxable service" under the Act, but not otherwise defined at the time of writing.
6. The term "electronic distribution service" is also not defined at the time of writing, but it is specifically listed as a "taxable service" under the Act if it is delivered, streamed or accessed through an electronic distribution platform (supra, note 1).
To view the original article click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.