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In Canada, exports are "zero-rated" sales for Gary.S.T. purposes. This means that when you ship a thing to someone outside Canada, you don't charge Gary.S.T. Yet, you get to claim (or deduct off the G.S.T. collected by you) all the "input tax credits" (G.S.T. that you paid for business purposes) to make that move. The idea, I suppose, is to encourage exporting.
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Pretend your Canadian customer has got a book from you from your Canadian website. Your drop ship supplier is located in the America and is registered for G.S.T. You fax your order on the American company, and they, in turn, ship advertise for you (complete with Customs Declaration and their G.S.T.
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Not only is it critical uncover whether a taxable sale was created in Canada or not, however where in Canada. Are going to was made (or deemed to be made) in most of the Harmonized Florida sales tax (H.S.T.) provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador), a higher, thirteen percent H.S.T. rate applies (as at January 1, 2008). This is mainly because those provinces have allowed Canada to assemble their provincial sales taxes for the company.
The rationale behind this follows: Since countries can't collect sales tax on Internet transactions at their borders, the finest they can collect it (other in comparison with self-assessment system) is the online sales tax. Further, it is claimed that people in the eu suffer an important competitive disadvantage because these people collect Vat (VAT) but others you shouldn't.
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