Introduction of the Harmonized Sales Tax (HST) in Prince Edward Island

Circular Note No. XDC-40 of April 15, 2013

The Department of Foreign Affairs and International Trade (Office of Protocol) presents its compliments to Their Excellencies the Heads of Diplomatic Missions and notified Chargés d'affaires, a.i. accredited to Canada, and the Heads of International Organizations and other offices established in Canada, and has the honour to inform them of a change in the Prince Edward Island’s tax system reform, which has taken effect on April 1, 2013, and of its impact on the Provincial Sales Tax (PST) exemption currently enjoyed by certain accredited foreign officials.

The Department particularly asks that diplomatic missions transmit the content of this Note to all consular posts that has jurisdiction in this province.

Introduction of the Harmonized Sales Tax (HST) in Prince Edward Island

Effective April 1, 2013, the Prince Edward Island's Provincial Sales Tax (PST) and the federal Goods and Services Tax (GST) have been replaced by a single value added sales tax which is the Harmonized Sales Tax (HST). The HST is administered by the federal government and has the same tax base and structure as the federal GST, with a few exceptions.

The HST for Prince Edward Island has a combined rate of 14%. The provincial portion is 9%, and the federal portion is 5%.

Removal of the PST exemption at point of sale and other changes to the rules for foreign representatives

Up to April 1, 2013, a certain number of foreign representatives and their spouses or common-law partners were enjoying a PST exemption at point of sale in PEI upon presentation of their federal identity card. Since the implementation of the HST on April 1, 2013, this tax is to be payable on all applicable goods and services, as is currently the case for the GST, and foreign officials no longer enjoy tax relief for the Province of PEI portion of the tax (9%) at the point of sale. However, foreign representatives and members of their families who are currently eligible for the GST rebate program are eligible for the HST rebate program.

Reciprocal arrangements

Eligibility for the GST/HST rebates is determined strictly by the Department of Foreign Affairs and International Trade, whose duty is to provide the Canada Revenue Agency (CRA) with the list of diplomatic missions, consular posts, international organizations and other eligible offices, as well as the names of accredited officials and officers and their spouses or common-law partners.

In keeping with its policy approach, the Department would like to reiterate that personal tax exemptions are granted to representatives of foreign states solely on the basis of reciprocal treatment of Canadians at post in the other State.

How to claim a reimbursement from the HST

Mission and International Organizations, as well as their accredited members, who are currently eligible for the GST rebate program are eligible for the HST rebate program to the extent of current conditions and limitations, unless otherwise indicated by the Department. Missions and International Organizations should refer to their respective bilateral arrangement for details about their HST rebate eligibility.

For further information regarding GST/HST rebate, Missions and International Organizations should refer to Circular Note XDC-1433 of July 3, 2008. The Canada Revenue Agency will process reimbursement claims in accordance with existing bilateral arrangements and other statutory instruments.

Customs Privileges Unaffected

All persons entitled to the privilege of importing goods duty and tax free under the Foreign Missions and International Organizations Act will be relieved of the HST at the time of release. For details regarding importation privileges, Missions and International Organizations should refer to the following document: MEMORANDUM D21-1-1 (PDF Version, 185 KB)^{Footnote *}

In addition, Missions and International Organizations and other Offices that wish to obtain general information with regard to their eligibility for the GST/HST rebate program and applicable restrictions, and the eligibility of their accredited officials or officials, may do so by contacting the Office of Protocol's Privileges and Immunities Unit at 343-203-3002.

The Department of Foreign Affairs and International Trade (Office of Protocol) avails itself of this opportunity to renew to Their Excellencies the Heads of Diplomatic Missions and notified Chargés d'affaires, a.i. accredited to Canada, and to the Heads of International Organizations and other offices established in Canada, the assurances of its highest consideration.

OTTAWA, April 15, 2013