New Countries Taxing Cross-Border B2C Digital Services

Canadian province of British Columbia

As of 1 April 2021 foreign suppliers of digital services like software to consumers residing in the Canadian province of British Columbia will be required to register and charge the British Columbia’s Provincial Sales Tax (PST) at a rate of 7% once their revenues from making those sales exceed CAD 10,000.

British Columbia becomes the third Canadian province – after Quebec and Saskatchewan – imposing provincial sales tax obligations on non-resident sellers of B2C e-services.

Ecuador

Starting from 16 September 2020, 12% of Ecuadorian VAT will need to be remitted on B2C sales of digital services made to consumers in Ecuador by the non-resident suppliers included on the Ecuadorian tax authorities list. The list of the affected digital services suppliers published on 10 September 2020 can be found here . The list will be updated from time to time to include new suppliers or exclude those who have already voluntarily registered as VAT payers in Ecuador.

The Ecuadorian legislator has foreseen the following two VAT collection mechanisms:

• Direct collection and remittance of VAT to the Ecuadorian tax authorities by the digital service provider; or

in respect of the services rendered by those suppliers, who do not voluntarily VAT register, the VAT will be withheld by the payment card issuers.

If you have any queries on the above, please get in touch with either your regular Essentia or Quipsound contact, or alternatively Marta Gałązka (+44 203 713 3535; marta.galazka@essentiaglobalservices.com)