Does Amazon Canada need to pay VAT? Why?

Today I will introduce you to the content of opening a store on Amazon. Now there are more and more merchants opening stores on Amazon. If you want to open a store, you need to determine the site where you want to open a store. So, do you need to pay value-added tax on Amazon Canada?

Does Amazon Canada need to pay VAT?

As long as you sell products on the Amazon platform, you need to pay value-added tax no matter which site you sell them on.

1. Before understanding, let's first go through the VAT tax rate:

VAT is the abbreviation of European Value Added Tax, which has three tax rates:

20% standard rate (applies to most goods and services)

5% low tax rate (such as household electricity or gasoline, etc.)

0% tax rate (applicable in very special cases)

2. Because most of our products are calculated at the first tax rate, the following examples are all calculated based on a 20% tax rate.

Import tax: Import tax = tariff (IMPORT DUTY) + import value-added tax (IMPORT VAT)

Import VAT = (declared value + first-leg freight + DUTY) X 20% (this can be refunded by the merchant)

Import Duty = Declared value x Product tax rate

Note: The product tax rate here is the product tax rate recorded by the customs and has nothing to do with the VAT rate above.

3. Sales VAT:

Sales VAT refers to the post-sales value-added tax that must be paid after the goods are sold. Different categories of products charge different VAT rates. The vast majority of products are calculated based on the standard VAT rate of 20%.

4. The VAT is calculated as follows:

Sales Value Added Tax VAT = Market Sales Price / 6 (the VAT paid is actually 1/6 of the market price).

Market sales price (tax included) = list price (price before tax) X 1.2.

Depending on different situations, digital consumption tax payment is mainly divided into two categories of fees.

The first is the fees for online services (including sales commissions, subscription fees, variable settlement fees, per-product fees, promotion and product sales fees, refund commissions, Amazon checkout, sales tax collection fees, etc.). This category is mainly for local sellers in specific areas required by Amazon, or other sellers whose company addresses are registered locally in the area.

The second type is the fees for operating in the FBA warehouse (including labeling fees, multi-bagging/multi-taping fees, bubble packaging fees, taping fees, opaque bagging fees, repackaging fees, etc., excluding warehousing and logistics fees). This category is mainly for all sellers who use local FBA warehouses in a specific area and incur the above fees.

I believe that Amazon will add more detailed instructions and charging information for some details in the future. From the current situation, if we still follow the above steps, Canada has warehouses in YVR1, YVR2, YVR3 and YVR4. If Amazon sellers use these warehouses, they need to pay attention, because the Canadian site does not automatically deduct fees like the US site, and sellers need to declare it themselves; if the seller does not operate well, it will affect the operation of the store.

Some friends choose to join the Amazon platform, and among many sites, they choose the Canadian site. So when preparing, in addition to wanting to understand the required relevant information and qualifications, there are many other aspects that need to be understood.

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