There are many different types of indirect taxes. In the US, there is sales tax. Across Europe and in many other countries there is value-added tax (VAT). In Canada and other regions there is the goods and services tax (GST). Each of these taxes have similarities, but there are differences to be aware of if your business is expanding to new countries.

In this article, we’ll focus on the details of the GST, including when you should be collecting it from your customers, how to register to collect GST, and what to do when it is time to file and remit.

What’s in this article?

• What is the GST?
  
• When am I required to collect GST from customers?
  
• How do I register to collect GST?
  
• How to file and remit GST
  

What is the GST?

The GST is a type of indirect tax levied on goods and services that is commonly found in Canada and the Asia-Pacific region. It’s paid by the customer and remitted to the tax authority by the business. The GST is very similar to VAT. However, VAT tax rates are typically higher than GST rates. For example, the average standard rate of VAT in the EU is 22%, while the rate of GST in Australia, Singapore, and Canada is 10%, 8%, and 5%, respectively. Some goods that are exempt from VAT may not be exempt from GST, and vice versa.

GST rates also vary by country. In Canada, the GST rate is 5%, while in New Zealand, the GST rate is 15%. In some countries with GST, the tax is levied at the federal level, but there are additional regional taxes businesses need to consider. For example, in Canada, businesses need to charge provincial state taxes (PST) in certain provinces in addition to charging GST. However, certain provinces have adopted a harmonized sales tax (HST) that combines GST and PST into one tax.

When am I required to collect GST from customers?

The threshold to collect GST varies by country. For example, in Canada, a remote seller supplying goods and services in Canada must register for federal GST/HST when they make sales in Canada exceeding 30,000 CAD within the past four calendar quarters. While in Singapore, remote sellers must register for GST under the Overseas Vendor Registration regime if in a calendar year they (1) have a global turnover exceeding SGD 1 million and (2) make B2C supplies of digital services to customers in Singapore exceeding SGD 100,000. Global turnover refers to all supplies made that would be taxable supplies if made in Singapore.

To ensure your business is compliant, check with the specific tax laws in the country where you make sales to understand your tax obligations.

How do I register to collect GST?

In most countries with GST, businesses are required to register with the tax authorities before they begin collecting GST from customers. Businesses can register online on the appropriate tax authority website. Here is more information on how to register to collect GST in Canada, and we have information on how to register in other countries with GST here.

How to file and remit GST

Submitting a GST return is the final step to compliance. If you have not collected GST from customers in a period and have no tax to remit, you may still need to file your return by the due date. Each country has their own return forms and filing frequency. Your due date and how often you file could depend on your annual sales revenue.

Filing frequency varies by country and business revenue, but businesses can usually submit returns and payments online. Failure to file and remit the correct amount of GST can result in interest and penalties.