DigitalOcean to start charging sales tax to Canadian Customers

Tue, 22nd September 2015, 17:56

Beginning October 1, 2015, American hoster DigitalOcean will begin charging all Canadian customers sales tax on their services. A spokesperson for the company addressing questions in a Reddit thread states that much like VAT for EU customers, DigitalOcean will be required to charge HST to customers in Canada because they now have a Canadian subsidiary. Depending on the province of residence, the tax rate will add an additional 5 to 15% onto invoices. Business customers are able to receive a rebate for this tax.

While DigitalOcean is remaining mum on the reasons for opening a subsidiary in Canada, Canadian users will continue paying for services in US dollars. The Reddit spokesperson responding to user questions stated “We will continue to charge all users in USD. We do this in order to maintain a stable price rate that is the same for all users and because it greatly simplifies our own backend processes”.

Possibly so, but this logic is flawed considering the Canadian gobermint requires the tax to be calculated on the Canadian dollar amount.. not the lower USD figure. (editor’s note: The present exchange rate on the Canadian dollar adds ~30% when converting to USD. Some users may also be paying additional fees by their financial institutions for currency exchanges)

DigitalOcean claims it will clarify the rationale for the Canadian subsidiary in the coming weeks. With what amounts to almost a 50% surcharge on Canadian clients, that may not be all they’re clarifying. Web Hosting