In trying to comply with tax laws for your e-business, you may find yourself falling down the rabbit-hole, going through the looking glass, and attending a Mad Tea-Party.
As one example, consider digitized merchandise that you might sell in the Canadian website, such as e-books, downloadable software, or subscriptions to content. You would be considered to selling “intangible personal property”. Unless your products is use “intellectual property” (such as software or e-books an individual produced or have obtained the rights for), you will want to charge R.S.T. The reason why, according to the Canada Revenue Agency, is that it COULD double inside Canada, even if it isn’t.
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The rationale behind this follows: Since countries can’t collect sales tax on Internet transactions at their borders, the only technique they can collect it (other than the usual self-assessment system) is by having an online sales tax. Further, it is claimed that businesses in the european Union suffer a major competitive disadvantage because they should be collect Value added tax (VAT) but others normally.