Entrepreneurship & Small Business

Do i have to collect taxes for IT services to US Clients

  • Last Updated:
  • Jun 24th, 2022 10:19 am
[OP]
Member
Apr 20, 2011
372 posts
66 upvotes
Toronto

Do i have to collect taxes for IT services to US Clients

I know the first thing RFD user would say is to connect with an accountant. I have already did. Actually connected with 2 and got mixed results. So asking from broader audience.

I am in ON and providing IT Services (software development etc) to a US client. I am doing it under numbered incorporation (registered it for some other purposes but now using same for this). Should i be collecting taxes from my US client?

My accountant told me that taxes are collected from residents of the same country i.e., if i was providing services to a canadian, so that those taxes can then be submitted to CRA. In my case, my client is not a canadian. So collecting taxes from him would mean that we submit those charges to who? He further added that have you seen paying *taxes* when you buy an item from amazon? you don't, you pay import fee etc but not taxes.

Same question but what if my company is registered in saskatchewan

Thanks
3 replies
Member
Jun 23, 2010
306 posts
98 upvotes
No, you don't charge HST to non-Canadians

Tiberious
Your friendly Ontario neighbourhood accountant
Newbie
Sep 23, 2010
17 posts
23 upvotes
Toronto
A slightly more detailed answer:

You collect taxes (HST/etc) if your providing services in Canada to someone (from anywhere). Otherwise every non-Canadian would be asking for the no-tax discount in every store here.

So your next question is: where are you technically providing the service - and that's the gotcha. If you're technically doing it in the US, then you don't have to collect HST, but you're probably having to pay some US taxes - and the IRS probably wants a word with you, as you need to file taxes in both countries. Also, step quietly as if you did it wrong, you might need a work permit/green card.

Basically put - there's no free lunch, as the onus is on you to figure out who to pay.
Deal Fanatic
Jan 21, 2018
6752 posts
7084 upvotes
Vancouver
foobox wrote: A slightly more detailed answer:

You collect taxes (HST/etc) if your providing services in Canada to someone (from anywhere). Otherwise every non-Canadian would be asking for the no-tax discount in every store here.

So your next question is: where are you technically providing the service - and that's the gotcha. If you're technically doing it in the US, then you don't have to collect HST, but you're probably having to pay some US taxes - and the IRS probably wants a word with you, as you need to file taxes in both countries. Also, step quietly as if you did it wrong, you might need a work permit/green card.

Basically put - there's no free lunch, as the onus is on you to figure out who to pay.
That's not quite technically correct.

You collect GST/HST based on where the client is located, not on where you are located or where you provide the services.

If you were deemed to have performed the services in the U,S,, then you would need to collect and remit applicable U.S. taxes, as well as filing a U.S. tax return and paying U.S. income taxes. That is not the case when you are providing the services remotely from Canada.

But services performed for foreign clients are "zero rated" for Canadian GST/HST. That is, they are still subject to GST/HST, but at a rate of 0%. This is important because you can still deduct the GST/HST paid on inputs to that sale, and the CRA may actually owe you money back. The reason for the zero rating is that Canada benefits from exports of goods or services.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)