E582: B.C. Is Taxing Sellers On Nearly All Of Your Fees

The Ecomcrew Ecommerce Podcast

Dave interviews David McCormick from Legacy Lawyers to talk about e-commerce taxation in B.C., Canada, specifically regarding the Online Marketplace Services Act, the Ministry of Finance's choice to start charging Provincial Sales Tax (PST) to every B.C. based seller on each of Amazon's seller fees, and why this choice is ultimately flawed.

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E-commerce taxation is a huge mess in British Columbia right now. If you're not from the great white north, then you should know that Amazon has been charging sellers PST since 2021 – something that Amazon wasn't exactly required to do. The worst part? They've been charging this on sellers' global sales—whether those sales occurred in Canada, the United States, or Brunei Darussalam. Because of this, many BC sellers have been paying a minimum of 1% of their sales (and most will be closer to 2% or greater) in provincial sales tax (PST). The Big Takeaway:

• Provincial Sales Tax (PST) is being applied to fees paid by sellers, and not just customer orders.
• While Amazon has taken a conservative approach to PST collection by overcharging, sellers face challenges in obtaining refunds for overpaid PST. The Ministry of Finance have been very difficult to appeal with even when having a legitimate defense.
• This leaves sellers with no choice; and they may need to engage legal help for refund applications.
• Political action is necessary to address unfair tax practices.
• Sellers should be proactive in communicating with their Members of the Legislative Assembly (MLAs).

Timestamps

• 00:00 - Introduction to E-commerce Taxation in BC
• 03:03 - Understanding the Online Marketplace Services Act
• 06:08 - Impact of PST on E-commerce Sellers
• 08:55 - Amazon's Approach to PST Collection
• 12:13 - Navigating Refund Applications and Denials
• 15:05 - Legal Interpretations and Software Taxation
• 17:53 - Challenges for Sellers in the Digital Economy
• 21:13 - Strategies for Sellers to Address Tax Issues
• 24:04 - Political and Legal Actions for Change
• 26:51 - Conclusion and Recommendations for Sellers

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Until next time, happy selling!