Etsy will collect sales tax from Canadian sellers starting July 1

It is learned that Etsy recently announced that from July 1, 2022, it will have to collect "sales tax" on goods sold by Canadian sellers to Canadian addresses.

The requirement is a new policy introduced by the Canadian government that requires marketplaces to collect taxes on goods and services sold on their platforms. The new law makes online marketplaces "tax collectors" and will tax sales even for sellers that were previously exempt from the tax requirement.

Like the U.S., Canada's tax scheme varies by province, and buyers shopping on Etsy will pay the same "regional" tax they would pay at a local store, regardless of where the seller is from.

Starting July 1, Etsy will collect the following applicable taxes:

• GST – Goods and Services Tax
• HST – Harmonized Sales Tax
• QST – Quebec Sales Tax / Quebec
• PST – Provincial Sales Tax / Columbia and Saskatchewan
• RST – Retail Sales Tax/Manitoba*

According to Etsy's announcement, sellers who have already paid sales tax need to provide it with a tax number to avoid double charging of taxes. Starting on July 1, Etsy will remove existing sales tax tools for Canadian sellers because they will no longer be required. In addition, in view of the new law, it will have to charge sellers service fees such as listing fees, Etsy Ads, Offsite Ads or Pattern subscription fees to charge GST/HST because many sellers will not process payment and transaction fees.

We understand that the new tax rules only affect sales within Canada. International sellers who import goods directly to Canadian buyers do not appear to be affected by the change, as the Canada Border Services Agency handles all applicable import tax calculations and collects taxes from buyers before shipping or picking up the goods.

Editor ✎ Nicole/

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