Ask HN: online sales taxes?
1 comments
Does that count as an export?
Yes. If you provide a service to people outside of Canada, this counts as an export and is zero-rated (i.e., 0% tax).
Do I have to register my business in the jurisdiction of wherever I sell (that sounds silly, but I need to know for clarity!)?
No. Unless you have a presence in a jurisdiction (approximately defined as "have an office", but the exact rules vary -- simply renting a server somewhere doesn't count, though) you don't have to deal with that jurisdiction's sales taxes.
As an Ontario company, you'll need to deal with Ontario's RST (for Ontario customers only) and GST (for Canadian customers only). You don't need to worry about US sales taxes, you don't need to worry about European VATs, and you don't need to worry about other provincial sales taxes (unless you set up an office in another province).
Provincial and federal sales taxes are enough to worry about, though -- because depending on how your service is categorized you might have to charge a different sales tax rate or none at all. I ran into enough ambiguities in the rules that for tarsnap I'm taking the simple approach of not accepting Canadian customers for now -- because the only thing I could be absolutely sure about was that I didn't have to charge any tax to non-Canadians.
Yes. If you provide a service to people outside of Canada, this counts as an export and is zero-rated (i.e., 0% tax).
Do I have to register my business in the jurisdiction of wherever I sell (that sounds silly, but I need to know for clarity!)?
No. Unless you have a presence in a jurisdiction (approximately defined as "have an office", but the exact rules vary -- simply renting a server somewhere doesn't count, though) you don't have to deal with that jurisdiction's sales taxes.
As an Ontario company, you'll need to deal with Ontario's RST (for Ontario customers only) and GST (for Canadian customers only). You don't need to worry about US sales taxes, you don't need to worry about European VATs, and you don't need to worry about other provincial sales taxes (unless you set up an office in another province).
Provincial and federal sales taxes are enough to worry about, though -- because depending on how your service is categorized you might have to charge a different sales tax rate or none at all. I ran into enough ambiguities in the rules that for tarsnap I'm taking the simple approach of not accepting Canadian customers for now -- because the only thing I could be absolutely sure about was that I didn't have to charge any tax to non-Canadians.
IANAL, but you don't have to worry about US taxes. You have to collect sales taxes for a particular state only if you have a store or the like in that state. I think, but do not know for sure, but I think activities such as R&D dont count as a "presence." In the US, your best source of advice is probably a CPA, rather than a lawyer. Cheaper too.
For my startup, I'm building a web-app and charging a monthly fee for users. As a Canadian, I registered my corporation federally and provincially (Ontario). Now, what happens when I sell my web-app service to someone in the US? Does that count as an export? Do I have to register my business in the jurisdiction of wherever I sell (that sounds silly, but I need to know for clarity!)?
For those hackers and founders out there, what is your opinion on this issue?
As I really have no capital for my startup, I'd prefer to get advice from a lawyer as a last resort.