

Ask HN: online sales taxes? - lee

I'm confused right now about how sales taxes are handled for online services.<p>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!)?<p>For those hackers and founders out there, what is your opinion on this issue?<p>As I really have no capital for my startup, I'd prefer to get advice from a lawyer as a last resort.
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cperciva
_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.

~~~
russell
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.

