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Expert: A Trade Information Officer at the office of Ontario Exports
My question is, I own a small company that is presently doing business with other Canadian companies. I would like to know more information about how a Canadian company may export and import software to and from European countries (including those that are not members of EC) and US, and how the NAFTA agreements may affect the software and hardware (hi-tech) business development and possible ventures. Is there any source of specific information regarding those matters?
A Trade Information Officer at the office of Ontario Exports answered:
"In the case of sales of software over the Internet, it is much more difficult to track and tax such transactions because there is no physical good to transport across borders. Most online sales of software are taxed at the point of sale site before users can download or access the software. Governments are still struggling to find a method of tracking and taxing such sales.
NAFTA effectively introduced a zero duty rate on computers and computer parts within the NAFTA countries. Software services, i.e. development of software by a programmer as well as related support services are duty-free but not tax exempt. This means that the value of a contract for services is taxable, both GST and PST if the services are sold in Canada. If the services are provided remotely to a client outside of Canada and the contract stipulates the end user location, then no GST or PST is applicable since the service is exported. However the end user may have to pay taxes in their local jurisdiction.
Sales of software are subject to all applicable taxes and export duties whether or not they are transferred electronically."
Further information can be obtained from the Canada-Ontario Business Service
Centre (COBSC). COBSC can be reached at:
Tel: (416) 954-4636
Fax: (416) 954-8497
The Trade Information Officer can be reached at:
Tel: (416) 325-6938 or
toll free outside of Toronto: 1-877-468-7233
Fax: (416) 314-8222
Or send a letter:
Ontario Exports INC
7th Floor, 56 Wellesley Street West
About the author
Ontario Exports INC. operates under the auspices of the Ministry of Economic Development and Trade. Ontario Exports INC. is a renewed agency that provides enhanced support for Ontario exporters. You can find them at: www.ontario-canada.com/Export