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What is the Difference Between Sales Tax and Goods and Service Tax (GST)?

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What is the Difference Between Sales Tax and Goods and Service Tax (GST)?

Paying taxes as an eCommerce seller can feel a lot like playing whack-a-mole. Just as soon as you’ve paid one bill, there’s another one ready to pop out and claim your business’s hard-earned money.

It can be tough to stay on top of your tax obligations. Do you need to pay sales tax? Use tax? Goods and service tax (GST)?

Well, guess what? We’ve got good news. If you’re a US-based seller and you only ever sell to US customers, you can stop worrying about GST. US sellers pay sales and use taxes - not GST.

If, on the other hand, you sell into a country with a GST program, stay tuned. You may be responsible for registering for and remitting taxes in order to remain in compliance with their GST tax schemes.

Which Countries Have Goods and Service Taxes (GST)?

As of 2014, 160 countries around the world had implemented either a VAT or GST program. Take the Canada sales tax, as an example.

As of 1991, Canada charges a nationwide GST of 5%. Some provinces charge a provincial sales tax (PST) on top of the GST; others use a harmonized sales tax (HST) to simplify the tax filing process by sending the entire amount directly to the Canada Revenue Agency.

If you - a US seller - want to sell to Canadians, you may be required to register for a Canadian Business Number and sign up for the GST/HST in order to remit the proper taxes. If you plan to sell through Amazon’s marketplace (whether or not you intend to use Fulfillment by Amazon), it’s worth checking out the company’s Global Selling guide to make sure you’re covered.

Of course, there are exceptions to the rule. If you sold less than $30,000 to Canadian buyers over a rolling period encompassing the last four quarters, you likely won’t be required to file GST (though you may still be obligated to pay PST in some provinces). Canada also has a list of “zero-rated” goods and services. If you sell items on this list, you won’t have to pay GST on them.

Navigating GST Requirements

Of course, Canada is only one country that collects GST. There are plenty of others in the world - and they all have their own requirements and restrictions.

Frustrating, right? It doesn’t have to be.

When you partner with a company like Quaderno, you take GST tax compliance off your plate. Not only do you get the satisfaction of knowing you’re collecting and filing the right taxes, you free up time to focus on other priorities. It’s a win-win for savvy business owners. Get started now with a free trial at Quaderno.

Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the tax authorities.