GENERAL INFORMATION: 
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As announced in British Columbia’s Budget 2022 on February 22, 2022, effective July 1, 2022, certain marketplace facilitators must charge and collect provincial sales tax (PST) and the municipal and regional district tax (MRDT) on taxable sales and leases that they facilitate through an online marketplace.  This includes taxable sales of accommodation facilitated through an online marketplace by an online marketplace facilitator.

A marketplace facilitator is a person who:

• operates, owns or controls (solely or jointly) an online marketplace,
• through the online marketplace, facilitates a marketplace seller’s retail sales of goods, software or taxable services, and
• collects payment in respect of the retail sales of goods, software or taxable services.

 
Marketplace facilitators must register to collect and remit PST effective July 1, 2022, if they facilitate a marketplace seller’s retail sale of:

• goods that at the time of sale are located within Canada and are sold to a person in BC,
• software for use on or with an electronic device ordinarily situated in BC,
• accommodation in BC, or
• taxable services, other than accommodation, to a person in BC

 
However, marketplace facilitators are not required to register if:

• the gross value of retail sales of goods, software and taxable services that the marketplace facilitator made or facilitated in the preceding 12 months was $10,000 or less, or
• the reasonable estimate of the gross value of retail sales of goods, software and taxable services that the marketplace facilitator will make or facilitate in the next 12 months is $10,000 or less, or
• There are two or more marketplace facilitators who jointly operate, own or control an online marketplace and at least one of the other marketplace facilitators is registered for PST and will collect all PST payable for those taxable sales made through the online marketplace.

 
A marketplace seller is a person who, through an online marketplace, sells goods, software or taxable services (including accommodation). 
 
Additional information on the new rules is available in the Ministry of Finance’s Bulletin 142, Marketplace Facilitators, Marketplace Sellers, and Online Marketplace Services, available at: https://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/pst-142-marketplace-facilitators.pdf. In addition, Bulletin 120, Accommodation, has been updated with information on the new rules and is available at: https://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/pst-120-accommodation.pdf.
 
SPECIFIC QUESTIONS:
 
1. Is the municipal and regional district tax (MRDT) and provincial sales tax (PST) exempt for all prepaid online travel agency (OTA) bookings? 

These prepaid bookings are still subject to PST and MRDT (where applicable) as sales of accommodation in BC, unless a specific exemption applies.  However, effective July 1, 2022, online marketplace facilitators are required to collect and remit the PST and MRDT where they facilitate retail sales of accommodation in BC made by an online marketplace seller through an online marketplace.   Online marketplace facilitators are also generally required to register to collect and remit PST where they facilitate retail sales of accommodation in BC.

When it comes to online travel agency bookings, the online travel agency is considered an online marketplace facilitator and the accommodation provider is considered an online marketplace seller.  Therefore, for prepaid bookings made through the online travel agency website, the online travel agency is required to collect and remit the applicable PST and MRDT on the facilitated accommodation sale.  The accommodation provider does not collect and remit the PST and MRDT on these sales.  Nevertheless, the accommodation provider remains jointly and severally liable for any PST and/or MRDT not collected and remitted by the marketplace facilitator.

Also, accommodation providers themselves are still required to collect and remit PST and MRDT on sales of accommodation in BC where they do not sell the accommodation through an online marketplace facilitator (e.g. the accommodation provider sells it over the phone or through their own website).

2. This does not apply for Fit and Tour bookings, only online travel agencies?

Where “Fit” and “Tour” bookings refer to purchases of tourism services from a tourism agent where accommodation has been packaged into that tourism service.  

If a marketplace facilitator is required to be registered, then they must collect and remit PST and MRDT, when applicable, on all taxable sales of accommodation that they facilitate through their online marketplace. 

However, where accommodation is purchased by a tourism agent and is packaged into a tourism service that the tourism agent sells to their customer through an online marketplace, the tourism agent is not considered to be making a sale of accommodation.  Therefore, if a marketplace facilitator facilitates the sale of tourism service (that includes accommodation) by a tourism agent through the facilitator’s online marketplace, the marketplace facilitator does not charge PST or MRDT on the sale.  No taxable sale of accommodation has taken place.

If the “Fit” or “Tour” booking does not involve purchasing a packaged tourism service from a tourism agent, then the booking does involve the taxable sale of accommodation.  If a marketplace facilitator facilitates the sale of accommodation through the facilitator’s online marketplace, the marketplace facilitator must charge PST and MRDT on that taxable sale of accommodation.

3. Do OTA bookings that pay at the hotel still pay all taxes (GST, PST, MRDT)?  

The Ministry cannot provide advice on the taxes of other jurisdictions, or the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST), as that is a federal tax on sales of goods and services. The Canada Revenue Agency (CRA) is responsible for administering the GST/HST. For questions concerning the application of the GST/HST, your members may visit the CRA’s dedicated GST/HST web pages at or call the CRA at 1-800-959-5525.

PST and MRDT apply to all sales of accommodation in BC (unless a specific exemption applies) regardless of how and when the purchase of accommodation is made.

Who is responsible for collecting and remitting the PST and MRDT on a taxable accommodation sale depends on who is collecting the payment for the accommodation.
 
If an individual books accommodation through an online marketplace but pays the accommodation provider directly, then PST and MRDT must be levied by the accommodation provider.  In this situation, the online marketplace is not acting as an online marketplace facilitator because they are not collecting payment in respect of the accommodation.  The accommodation provider is directly collecting the payment.

If an individual books accommodation through an online marketplace and payment for the accommodation is collected by the online marketplace, then the online marketplace is acting as an online marketplace facilitator and is required to collect and remit the PST and MRDT on the accommodation sale.

4. They are not GST exempt, only provincial taxes?  

As mentioned above, the Ministry cannot comment on the taxes of other jurisdictions, or the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST), as that is a federal tax on sales of goods and services. The Canada Revenue Agency (CRA) is responsible for administering the GST/HST. For questions concerning the application of the GST/HST, your members may visit the CRA’s dedicated GST/HST web pages at or call the CRA at 1-800-959-5525.
 
We assume that the reference to “only provincial taxes” refers to accommodation providers who sell their accommodation on an online marketplace are not required to levy and collect PST and MRDT on that accommodation because the online marketplace facilitator will.  If so, then that is correct.  

5. Is there anything that the hotels should be doing to change their collection and remittance of taxes?  
Accommodation providers do not collect and remit PST and MRDT on sales of accommodation that are sold through an online marketplace facilitator that is required to be registered for PST.
 
If an accommodation provider is unsure of whether a marketplace facilitator will be collecting and remitting PST and MRDT on accommodation sales made through the facilitator’s online marketplace, they should contact the facilitator as soon as possible to verify that the facilitator will be collecting and remitting the PST and MRDT.  If the marketplace facilitator does not levy PST and MRDT as required on accommodation sales made through the online marketplace, the accommodation provider cannot charge PST and MRDT directly to the guest.  The guest is required to self-assess and pay any PST and MRDT directly to government.

6. How is my business protected if I stop charging PST on July 1 assuming it will be remitted by the marketplace facilitator (e.g. Expedia, Booking.com)?  If the PST and MRDT is for some reason not paid on these bookings and I am audited in the following year, I have no recourse to collect PST from the guest.  Is this correct?  

While the marketplace facilitator is required to register, levy and collect PST and MRDT on accommodation sales that are facilitated through the online marketplace, the accommodation provider remains jointly and severally liable for any PST and MRDT not collected and remitted by the marketplace facilitator if the marketplace facilitator is later assessed for the outstanding PST and MRDT.

As noted in our answer to #5, if the marketplace facilitator does not levy PST and MRDT as required on accommodation sales made through the online marketplace, the accommodation provider cannot charge PST and MRDT directly to the guest.  The guest is required to self-assess and pay any PST and MRDT directly to government.

7. I am assuming the tax consequence to be triggered by the payment, for example, an Expedia Prepaid booking attracts tax to be levied by Expedia. However, if someone uses Expedia, but just as a booking tool and then pays us directly when they get to the hotel, does that extinguish Expedia’s role as tax collector and put it back on the hotelier?  
Yes, as noted in answer to #3, this is correct.
 
Who is responsible for collecting and remitting the PST and MRDT on a taxable accommodation sale depends on who is collecting the payment for the accommodation.
 
If an individual books accommodation through an online marketplace (e.g. Expedia) but pays the accommodation provider directly, then PST and MRDT must be levied by the accommodation provider.  In this situation, the online marketplace is not acting as an online marketplace facilitator because they are not collecting payment in respect of the accommodation.  The accommodation provider is directly collecting the payment.

If an individual books accommodation through an online marketplace and payment for the accommodation is collected by the online marketplace (e.g. Expedia), then the online marketplace is acting as an online marketplace facilitator and is required to collect and remit the PST and MRDT on the accommodation sale.
 
FURTHER INFORMATION
 
For more information on British Columbia’s PST, including registration, and collecting and remitting the PST, can be found in a series of PST Bulletins and Notices, and the Small Business Guide to PST. Our Forms Page contains exemptions certificates and forms related to registration, applying for a refund, and self-assessing the PST.
 
For additional information, including free interactive webinars, informational videos and upcoming events, you  may be interested in visiting the Government’s PST Outreach webpage. To receive updates about legislative changes and new public information, click “Subscribe To Receive Updates.”
 
To share any additional questions – reach out to Kelsey@bcha.com.