As of July 1, 2021, Canada requires entities like Twilio Inc. (“Twilio”) to collect Goods and Services Tax (GST)/ Harmonized Services Tax (HST) for digital services sold to customers in Canada. This guide covers the following topics:
- Goods and Services Tax (GST)/ Harmonized Services Tax (HST) overview
- When will Twilio start charging GST in Canada?
- How can I be tax exempt for GST?
- I am a business, but do not have a GST number. I am not required to register for GST since my business falls under the required sales threshold for registering
- How do I enter my GST number?
- I forgot to enter my GST number, but am a GST registered B2B customer - can I request a refund?
- Are Charitable Organizations, Schools, Non Profit Organizations, etc. exempt from taxation?
Goods and Services Tax (GST)/ Harmonized Services Tax (HST) overview
Canada passed legislation effective July 1, 2021, requiring non-resident entities like Twilio selling digital services to collect and remit GST/HST on sales to customers located in Canada. Non-residents are only required to apply GST/HST on Business to Customer (B2C) transactions. Business to Business (B2B) transactions will not be charged GST/HST if a valid GST/HST number is provided by the B2B customer. B2B Customers should self assess on their end.
Additional Provincial Taxes
British Columbia & Saskatchewan
If you are a customer located in the province of British Columbia and Saskatchewan, both B2B and B2C customers are subject to Provincial Sales Tax (PST) on their purchases from Twilio, unless an exemption applies (see below). There is no exemption from PST in these jurisdictions. For example, if you are a B2B customer located in these two provinces, your purchases will be exempt from Federal GST but taxable for PST.
If you are a customer located in Quebec, B2C customers are subject to Quebec Sales Tax (QST). B2B customers are exempt on our end. If the business customer provides a valid QST number. B2B customers located in Quebec should self assess on their end. For example, a B2B customer will be exempt from Federal GST and QST but should self assess under the reverse charge mechanism on their end.
When will Twilio start charging GST/HST/QST/PST in Canada?
Twilio will start charging Canadian taxes in two phases:
- Phase 1 Customers: Canadian Customers who do not have a GST/HST/QST/PST but a Canadian Province in their Customer Console will be charged taxes (if applicable) starting with the November 2022 Usage, December 2022 Invoices
- Phase 2 Customers: Remaining Canadian Customers will be charged taxes (if applicable) starting with the January 2023 Usage, February 2023 Invoices
How can I be tax exempt for GST?
B2B customer transactions with a valid GST/HST/QST number will not be taxed on our end. However, B2B customers should self-assess the GST/HST/QST on their end through the reverse charge mechanism. There is no PST exemption for B2B customers located in Saskatchewan and British Columbia. In general, B2B and B2C customers located in Saskatchewan and British Columbia are taxable, unless an exemption applies.
I am a business, but do not have a GST number. I am not required to register for GST since my business falls under the required sales threshold for registering.
The GST/HST/QST/PST laws for nonresidents are designed to capture GST from B2C consumers and from B2B consumers that fall under the sales threshold. Unless a B2B customer can provide a valid GST/HST/QST number, they will be considered a B2C customer and the transaction will be subject to tax. Nonresidents are not required to tax B2B customers with valid GST numbers since B2B customers are supposed to self-assess the GST on their end.
How do I enter my GST/HST/QST number?
B2B customers can login to their account in the Twilio Customer Console to update their Canadian federal and provincial tax IDs starting November 21, 2022.
How is GST/HST/QST/PST determined applicable?
GST/HST/QST/PST is applicable based on the type of products or services that are purchased. We have determined that most of Twilio’s services are subject to Canadian taxes.
Please confirm your billing address is up to date in the Twilio Customer Console for accurate taxation in the correct jurisdiction. For help updating your billing address, see Account and Settings.
I forgot to enter my GST number, but am a GST registered B2B customer - can I request a refund?
If you are a B2B customer with a valid GST number in Canada, please contact our Support team for a credit of the GST amount charged within 90 days of the initial charge. For invoices issued in closed periods, we will credit the GST charged in the following month’s invoice.
Are Charitable Organizations, Schools, Non Profit Organizations, etc. exempt from taxation?
For British Columbia there are specific exemptions, amongst others, for services supplied to specified or notified schools and First Nation Individuals on a First Nation Reserve. In order for the exemption to apply, the customer must provide Twilio SendGrid with a specific exemption certificate. This is a certificate issued by the taxing authority to the customer confirming that the customer is exempt from local PST. Without the certificate, Twilio SendGrid would be liable to collect PST on the supply.
For Saskatchewan, there are also similar exemptions for First Nation Individuals and certain specified Government bodies. There is no exemption for specified schools.
There is no requirement to provide an exemption certificate, but the customer will need to provide evidence that the customer is eligible for the exemption. For example, for supplies to eligible government agencies, the supplier would need to retain a copy of the PO issued by the government agency or for supplies to First Nation Individuals, the supplier would need to collect the First Nation Individual ID number and mention it on the face of the invoice, in order for the exemption to apply.
Additional Exemptions for British Columbia and Saskatchewan:
- Software Purchased for Resale - You are exempt from PST when you purchase software for the sole purpose of reselling the software (including the rights to that software) to other persons.
- Software Incorporated Into Goods, a Telecommunication Service or Other Software - You are exempt from PST when you purchase software for the purpose of being processed, fabricated or manufactured into, attached to or incorporated into: other software for the purpose of retail sale, a telecommunication service for the purpose of retail sale, or goods for the purpose of retail sale or lease.
Please note that the above exemptions may have additional requirements in order to qualify for exemption. Please review the British Columbia and Saskatchewan tax websites for further information. Additionally, the above exemptions are not exhaustive. If you believe that you are exempt, please reach out to firstname.lastname@example.org.
I have additional questions not outlined in this article
Please reach out directly to email@example.com for further assistance regarding your tax inquiry.