When you create an on-demand marketplace matching thousands of service providers with buyers of those services, you may be entering a market where the service providers are required to collect and remit sales tax on those services. Indeed, AirBnB is already collecting and remitting 8% sales tax on behalf of its customers in British Columbia. Federal, provincial and municipal governments are catching up with the taxing intricacies of the sharing economy, make sure your on-demand platform is ready when the tax man comes knocking at the door.
Why is it important for you as an owner of an On-Demand App to allow your service providers to collect and remit sales taxes for their services? Put simply, to protect yourself and your service providers from tax liability. If your service providers are required to collect and remit sales taxes on their services and fail to do so, they could be facing a sizable tax remittance bill for sales taxes they failed to collect. Aside from losing valuable sellers from your marketplace, you could also be facing liability to your service providers for failing to provide them with a platform which allows them to collect and remit those sales taxes.
Our Sales-Tax Remittance Solution
Cellflare’s On-Demand App platform includes a sales-tax remittance module, which allows you to automatically give your service providers the ability to collect and remit sales taxes on their services based upon the combined federal and provincial sales tax rates in every jurisdiction across Canada.
Now your service providers can opt to automatically collect taxes on their services at the click of a button with detailed reporting of their ensuing collections so they can remit their taxes quickly and easily. Equally important, you are now protected as the provider of an On-Demand App Platform which gives your users the option to collect and remit sales taxes, so that any failures on their part do not expose you to liability as the owner of the On-Demand Platform.
We also give you complete back-end control over the applicable sales taxes for each jurisdiction in which your On-Demand Platform operates. There is no guesswork in choosing the applicable combined tax rates, we have already calculated them for you based upon where your service providers operate. Triggering the feature in your service provider’s interface is as simple choosing their provincial location and turning on the sales tax remittance the module at the click of a button.
Curious about whether you should to allow your service providers to collect and remit sales taxes? Have a look at our recent post, which explores which services are subject to sales tax remittance obligations here. Ultimately, the issue of whether you should allow your service providers to collect and remit taxes is specialized question best left to your lawyer, but rest assured that we have you covered in the event that you need to do so.
Who would you suggest speaking to for more information about tax remittances? Can my accountant give me advice?