• Jack
• April 4, 2023
• 19 Comments

Whether you are a local citizen or a foreigner running a business in Canada, you will be required to charge GST or HST from your clients under specific conditions. This is why it is necessary to know when the tax is applicable to avoid breaking the law.

You may also be wondering, “Do I need to charge GST/HST to foreign clients” because of the different rules. The good thing is you are not required to wonder anymore about these things. Here is a guide that will help you understand the taxing system of Canada.

What Is GST/HST In Canada?

The Goods and Services Tax (GST) or Harmonized Sales Tax (HST) are charges that are applied to different services and products in Canada. They are the same thing as value-added tax (VAT) which is used in foreign countries. The percentage of GST varies in different provinces of Canada.

So there are various ways to decide how much tax you must be charging your clients. Typically, if your place of supply is in Ontario, you must apply 13% GST on your goods and services to clients in Canada. Meanwhile, the rate is 5% if you make your products in a non-participating province.

There are also some goods that are applicable to zero-rated tax. This means that the tax applicable on such services is 0%, so you will not be charging any GST on it.

Are You Required To Charge GST/HST To Foreign Clients?

Many new business owners in Canada ask themselves, “Do I need to charge GST/HST to foreign clients” due to a lack of knowledge. The answer to this is no. Customers outside Canada are applicable for the zero-rated tax on all goods and services. 

This means you don’t have to charge GST or HST on the goods that such clients purchase. However, if a foreign client has placed an order with a delivery location in Canada, you must charge GST to them. The rate will depend on the place of supply.

So you will be charging GST to foreign clients as long as their order location is within Canada. If they have international delivery to another country, you will be charging 0% GST, so basically nothing.

It is also essential that your client is a true non-resident. This means they must not have Canadian citizenship or a strong presence in the country. If your foreign client is not a true non-resident, they will be applicable to GST as per the rules of the Canadian Revenue Agency (CRA).

Your client must also not be registered for GST/HST with the CRA. Even if they are non-residents but registered for tax, you will have to charge the relevant rate on taxable goods.

Final Words

This is all you need to know about do I need to charge GTS/HST to foreign clients. You must ensure the customer is a non-resident and placing an order outside Canada if you’re applying zero GST. 

If the client’s delivery location is within the nation, you should use the place of supply rule to charge them the relevant GST rate on taxable goods. Read more blogs at animixplaynews.