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Canada: Updated sales tax guidelines for e-marketplace facilitators and sellers (Saskatchewan)

Canada: Updated sales tax guidelines for e-marketplace

Saskatchewan released updated administrative guidelines for provincial sales tax (PST) to clarify the responsibilities of both marketplace facilitators and marketplace sellers for taxable sales made through an electronic platform. Accordingly, e-marketplaces and sellers need to review Saskatchewan’s new sales tax guidance.

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The updated PST administrative guidelines advise that marketplace facilitators are required to register and collect Saskatchewan’s PST on all taxable sales made through their platforms since 1 January 2020. However, some marketplace sellers may be relieved of their collection and remittance obligations when they meet certain requirements, under this new administrative guidance.


Background

Saskatchewan enacted PST measures for marketplace facilitators effective 1 January 2020. The province updated various administrative publications relating to these PST measures in late November 2020. Generally, under the PST rules, a marketplace facilitator is defined as a person that makes a marketplace available to a marketplace seller to make a retail sale, and that, directly or indirectly, collects the payment related to that taxable sale. Marketplace facilitators and operators of online accommodation platforms are required to register as “vendors” under the PST rules and collect PST on sales made through their platforms.

Saskatchewan initially announced its intentions to enact these PST registration requirements as part of its 2020 budget estimates delivered in March 2020, and again as part of its provincial budget in June 2020.


Marketplace facilitators defined as “vendors”

Marketplace facilitators are considered "vendors" under the PST rules if they collect, directly or indirectly, the payments from consumers or users and remit these payments to a "marketplace seller"—regardless whether the e-commerce platform conducts business in Saskatchewan. It appears that Saskatchewan updated its guidance to address the situation when both the marketplace facilitators and the original vendor are required to collect tax on the same supply under the PST legislation.

The guidance notes that the marketplace facilitator is obligated to collect and “remit PST on all taxable sales made through their platforms” (even though the legislation technically defines the facilitator as a “vendor” but does not deem the facilitator to have actually made the sale). In addition, the updated guidance advises that marketplace sellers are relieved of collecting the PST on taxable sales made to consumers in Saskatchewan through platforms of marketplace facilitators, when the sellers determine that:

  • The marketplace facilitators are properly licensed for PST purposes, and
  • The marketplace facilitators are collecting and remitting the PST on these taxable sales.

Marketplace sellers are still required to obtain a PST license themselves, and to collect and remit the PST on all other taxable sales they make, including sales made on a platform when the marketplace facilitator is not licensed for PST purposes.

Saskatchewan’s updated administrative guidance also clarifies the tax status of certain additional fees that marketplace facilitators charge to marketplace sellers, or that are charged to customers.


KPMG observation

Saskatchewan’s updated guidelines are not reflected in the current PST legislation. As a result, marketplace sellers may want to consider requesting a “comfort letter” from Saskatchewan to confirm their PST obligations for taxable sales made through the platforms of marketplace facilitators that are licensed for PST purposes.


Reminder of expanded list of “taxable services”

The legislative definition of “taxable services” was expanded to include electronic distribution services that are delivered, streamed or accessed through an electronic distribution platform (e.g., website, internet, portal or gateway). As such, businesses that provide such services (e.g., online video games, television shows, and computer services) generally qualify as a vendor under the Saskatchewan PST rules and need to collect and remit PST on such taxable services.


KPMG observation

While Saskatchewan’s updated administrative publications resolve some ambiguity on who must collect and remit PST on taxable sales made through e-commerce platforms, at least from an administrative point of view, some uncertainty remains for non-commercial goods imported into Saskatchewan from outside Canada. Currently, the Canada Border Services Agency (CBSA) collects the PST on non-commercial goods imported into Canada, under an agreement with Saskatchewan. The updated administrative guidelines do not address situations when PST may be collected twice on a particular taxable sale: once by the marketplace facilitator and once by the CBSA.

Read a December 2020 report [PDF 87 KB] prepared by the KPMG member firm in Canada

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