Yesterday, Washington State announced that beginning July 1 residents of British Columbia and Ontario become eligible for a non-resident sales tax exemption on purchases of goods in Washington for use outside the state.
Using a 1965 policy developed to address Oregon’s no sales tax policy, it is Washington’s view that the HST is not a sales tax. State law allows a sales tax exemption to residents of provinces that impose a sales tax of three percent or less. Washington sellers are not required to make tax-exempt sales to qualifying nonresidents, but most do. The exemption applies only to tangible personal property and does not apply to lodging, meals, or other retail services that are provided in the state.
In order to receive the exemption, qualifying residents must show proof of residency, such as a driver’s license, to the Washington seller. The seller must retain the information to support the exemption in the event of a tax audit. BC residents previously did not qualify for the exemption but both provinces are adopting a harmonized sales tax (HST) in tandem with the Canadian federal government beginning July 1. The HST technically is a value-added tax (VAT) and not a sales tax.Residents of other Canadian provinces that impose the harmonized VAT have been eligible for the exemption for years. Six states, including Alaska, Colorado, Oregon, Montana, Delaware and New Hampshire, eight Canadian provinces, and four U.S. possessions already qualify for this exemption.
Shelfspace will provide more information as it comes in.
How will this impact your business?
Do you believe BC consumers will do more cross border shopping?
Will this have any affect on spending in BC?
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