DO I NEED TO CHARGE GST/QST ON U.S. OR INTERNATIONAL SALES

If you sell goods or services to clients outside Canada — especially in the U.S. — you may wonder whether GST or QST applies. The rules vary depending on the type of product, whether you’re selling goods or services, and where the customer is located or consuming the supply. Many Quebec businesses make costly errors by charging GST/QST when they shouldn’t, or by failing to zero-rate legitimate exports. This guide explains when GST and QST apply to international sales and how to handle cross-border transactions properly.

Understanding international tax rules ensures correct invoicing, avoids disputes with global clients, and protects your business from reassessment.

LEGAL AND REGULATORY FRAMEWORK

Rules for international sales are governed by:

• the Excise Tax Act (GST)
• the Quebec Taxation Act (QST)
• place-of-supply regulations
• export provisions for goods and services

Under these rules:

• some supplies to foreign customers are zero-rated (0% GST/QST)
• some services are taxable depending on consumption location
• digital services follow destination-based taxation

Proper classification determines whether tax applies.

KEY COURT DECISIONS

Courts have confirmed:

• true exports of goods are zero-rated
• services consumed outside Canada may be zero-rated
• suppliers must document proof of export
• digital services often follow customer location, not supplier location
• mistaken tax charges must be refunded to customers
• zero-rating cannot be applied without proper evidence

Courts emphasize that the burden of proof is on the supplier.

WHY BUSINESSES GET CONFUSED ABOUT INTERNATIONAL SALES TAX

Common reasons include:

• assuming U.S. customers are automatically tax-free
• misunderstanding digital service rules
• not knowing what constitutes an “exported service”
• confusion between zero-rated and exempt
• treating Quebec customers outside the province as foreign buyers
• relying on incorrect e-commerce platform defaults

DO YOU NEED TO CHARGE GST/QST TO U.S. OR INTERNATIONAL CUSTOMERS?

Here is the clear breakdown.

1. SALES OF PHYSICAL GOODS TO U.S. OR INTERNATIONAL CUSTOMERS

Usually ZERO-RATED
If the goods are shipped from Quebec and delivered outside Canada:

• GST = 0%
• QST = 0%

You must keep documentation showing:

• shipping confirmation
• customs documents
• proof of export

If the customer picks up the goods in Quebec, GST/QST must be charged.

2. SERVICES PROVIDED TO U.S. OR INTERNATIONAL CLIENTS

Most services supplied to non-residents are zero-rated, except when the service is:

• related to real property in Canada
• related to goods located in Canada
• consumed in Canada
• a service to an individual physically in Canada during performance

Examples of zero-rated services to foreign clients:

• consulting
• software development
• design and creative services
• remote training
• digital marketing
• business advisory
• SaaS (if not used in Canada)

Examples of taxable services to foreign clients:

• services related to Canadian real estate
• repairs to goods located in Quebec
• certain in-person services performed in Quebec
• services consumed in Canada

3. DIGITAL PRODUCTS & SAAS TO U.S. OR INTERNATIONAL CLIENTS

If the customer is located outside Canada, digital supplies are generally zero-rated.

If the customer is in Quebec → QST applies.
If the customer is in another Canadian province → GST/HST/PST rules apply.

Destination-based rules apply.

4. TRAINING, COACHING, OR COURSES SOLD INTERNATIONALLY

If delivered to a customer located outside Canada:

• typically zero-rated
• but if the customer participates while physically in Quebec → GST/QST apply

Online courses delivered outside Canada are usually zero-rated.

5. SALES OF SERVICES TO NON-RESIDENT INDIVIDUALS IN QUEBEC

If the customer is physically in Quebec at the time of the service:

• GST/QST apply
Even if the customer lives in the U.S. or abroad.

6. SALES TO FOREIGN GOVERNMENTS OR ORGANIZATIONS

Most qualify for zero-rating, but documentation is required.

7. SPECIAL CASE: EXPORTING THROUGH FULFILLMENT CENTERS

If you use Amazon FBA or similar services:

• exports from Canada to foreign customers → zero-rated
• shipments from U.S. warehouses → may follow U.S. tax rules (no GST/QST)

Always track shipping origin and destination.

COMMON MISTAKES ON INTERNATIONAL SALES TAX

Businesses often:

• charge GST/QST when shipping internationally (incorrect)
• forget to zero-rate services provided to U.S. clients
• fail to document export shipments
• charge tax based on billing address only
• misconfigure Shopify or Amazon tax settings
• treat zero-rated sales as exempt (incorrect reporting)
• charge QST to international clients via payment processors

These errors lead to customer disputes and tax adjustments.

BEST PRACTICES FOR INTERNATIONAL SALES COMPLIANCE

• verify customer location before invoicing
• classify supplies as taxable, exempt, or zero-rated
• configure e-commerce platforms properly
• maintain proof of export for goods
• store contracts showing foreign service delivery
• reconcile zero-rated revenues separately
• ensure GST/QST amounts are not accidentally applied.

MACKISEN STRATEGY

Mackisen CPA helps businesses apply correct GST/QST rules to U.S. and international sales. We:

• review your services and products
• determine zero-rated vs taxable status
• configure tax codes in accounting and e-commerce systems
• prepare compliant invoices for international clients
• manage GST/QST filing and reporting
• respond to Revenue Québec verification letters

Our expertise protects your business from incorrect tax application and reassessment.

REAL CLIENT EXPERIENCE

A Montreal software firm charged QST to U.S. customers for months. Mackisen fixed settings, corrected filings, and refunded clients.

A consultant applied GST to international clients unnecessarily. Mackisen zero-rated services and recovered overpayments.

A Shopify seller failed to maintain proof of export. Mackisen created a documentation system to withstand audit review.

COMMON QUESTIONS

Are U.S. sales always tax-free?
Usually yes but only if goods are exported or services are consumed outside Canada.

Is zero-rated the same as exempt?
No. Zero-rated supplies still allow ITCs/ITRs.

Do I charge tax if the client is abroad but physically in Quebec?
Yes tax applies based on location during service.

Are digital services to the U.S. taxable?
Generally no they are zero-rated.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures your international GST/QST compliance is accurate, professional, and audit-proof. We protect your business from errors and optimize your sales tax strategy across borders.