28 July 2000 GST/HST Interpretation 31660 - Request for Information from

Dear XXXXX:

Thank you for your letter of May 5, 2000, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to residents of the XXXXX.

Based on the information provided, XXXXX is seeking information with respect to the availability of GST/HST refunds or rebates to residents of XXXXX.

In the submission, reference is made to "taxable persons" based in XXXXX who are eligible to deduct input VAT for the VAT they owe or paid on the purchase of goods and services for use in their "activities". The submission does not include definitions of the above terms. We assume that this is similar to the Canadian GST/HST where a person engaged in "commercial activities" is generally able to claim input tax credits for the GST/HST they owe or paid on their purchases to the extent that the purchases are for use, consumption or supply in the course of the person's commercial activities.

It appears that under the XXXXX VAT Act, a VAT refund is available, in certain circumstances, to "taxable persons" who have not established their business in XXXXX but who have acquired goods or services while in XXXXX and incurred VAT expenses or who have paid the VAT on the importation of goods, provided that an input VAT could have been deducted by the person if the person had been based in XXXXX. The VAT refund is payable to a "taxable person" based in Canada on the condition, in the spirit of reciprocity, that a "taxable person" based in XXXXX may claim a similar refund in respect of the GST/HST that may be incurred while in Canada.

To ensure that the above condition of reciprocity is met,XXXXX is seeking information regarding whether a "taxable person" based in XXXXX is eligible for refunds or rebates of the GST/HST incurred by that person while in Canada.

Generally, a non-resident person does not pay the GST/HST in respect of goods and services it acquires. Where the goods or services are supplied to the non-resident outside Canada, the GST/HST does not apply. In most situations where the GST/HST does apply, the supply is either zero-rated (subject to the GST/HST at 0%) or a rebate of the tax is available. In addition, certain importations into Canada are afforded non-taxable status for purposes of the GST/HST. Where the goods or services acquired by the non-resident are: acquired outside Canada, zero-rated or the importations are non-taxable, a rebate would not be necessary. The following few pages provide a general overview of the types of goods and services that are zero-rated or afforded non-taxable importation status, along with a summary of the rebate programs and the criteria for eligibility that are available for non-residents.

Part V of Schedule VI to the Excise Tax Act (the "Act") contains the provisions that identify the types of goods and services that are zero-rated as exports. GST/HST Memoranda Series Chapters 4.5.2 Exports - Tangible Personal Property, and 4.5.3 Exports - Services and Intellectual Property, enclosed for your review, provide interpretive policy in respect of these provisions. Generally, the supply of a good in Canada is zero-rated pursuant to Part V of Schedule VI to the Act provided the good is exported within a reasonable time frame and is not consumed, used, sold or further processed in Canada prior to its exportation. With few exceptions, supplies of services made in Canada to a non-resident are zero-rated for GST/HST purposes. Included in these exceptions are: services in respect of real property or tangible personal property situated in Canada, services rendered to an individual while that individual is in Canada, and services made to an individual who is in Canada at any time when the individual has contact with the supplier in relation to the supply. As noted above, chapters 4.5.2 and 4.5.3 of the Memoranda Series should be reviewed for a more detailed analysis of the relevant zero-rating provisions. Information regarding the imported goods that are afforded non-taxable importations status is enclosed in GST Memorandum 300-8: Imported Goods. The following paragraphs highlight other rebates that are available to non-residents. The relevant legislative provisions along with proposed amendments to these provisions have been enclosed for your review. In addition, to facilitate an understanding of these provisions, the relevant GST/HST Guides and Memoranda are enclosed. These documents among many others may also be accessed electronically on our web site at the following address: www.ccra-adrc.gc.ca.

Non-Resident Rebate in Respect of Exported Goods

Subsection 252(1) of the Act provides that a person who is not resident in Canada is entitled to a rebate of the GST/HST paid in respect of most goods acquired in Canada that are for use primarily outside Canada and that are exported by the person within 60 days. For GST/HST purposes, a "person" means an individual, a partnership, a corporation, the estate of a deceased individual, a trust or a body that is a society, union, club, association, commission or other organization of any kind. "Primarily" is defined as greater than 50%. The rebate in respect of commercial exports by a non-resident may be claimed by completing the General Application for Rebate of Goods and Services Tax (GST)/Harmonized Sales Tax (HST) form which is enclosed in the guide of the same name. The guide Tax Refund for Business Visitors is enclosed as it elaborates on the eligibility criteria for the refund and includes an application form.

Rebate for Accommodation

A rebate is available of tax paid on the purchase of eligible accommodation by visitors to Canada. The pamphlet entitled Tax Refund for Visitors to Canada, directed at individuals, is enclosed as it elaborates on the criteria for the rebate and includes a copy of the rebate application.

Rebate for Non-Resident Exhibitors, Sponsors and Organizers

Section 252.3 of the Act provides, that an unregistered non-resident exhibitor at a convention is entitled to a rebate of the tax paid in respect of the use of the convention facility and tax paid on any related convention supplies acquired by the exhibitor in relation to the convention. A rebate of the GST/HST paid in respect of related convention supplies is also available under section 252.4 of the Act to sponsors and organizers of foreign conventions that are not registered for the GST/HST. The guide entitled Tax Refund for Non-Resident Tour Operators, Incentive Travel Organizers, Meeting Planners, and Convention Organizers, which has been updated to reflect the current proposed amendments to the legislation, has been enclosed as it further elaborates on the criteria for eligibility of this refund. The following publications, also enclosed, provide additional information regarding this rebate: GST/HST Memoranda Series, Chapter 27.2 Conventions, the guide GST/HST Information for Non-Resident Meeting Planners and Convention Organizers and Welcome to Canada - Your Guide to Bringing a Convention, Meeting, Trade Show or Exhibition Across the Canadian Border.

Should you wish to make any representations concerning the extent of reciprocity please send them to:

The Department of Finance
Attn: Andrew Marsland
Sales Tax Division
L'Esplanade Laurier, 16th Floor 140 O'Connor Street
Ottawa, Ontario
Canada K1A 0G5

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Customs and Revenue Agency with respect to a particular situation.For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series. Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-8810 or Jeff Frobel at (613) 952-8812.

Yours truly,

Ivan Bastasic
Manager
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate