US sales and Canadian corporations
This guide explains what changes when a Canadian corporation sells goods or services to customers in the United States: GST/HST on exports, US income tax under the Canada–US treaty, state sales tax, customs and currency. We prepare and file your articles of incorporation for $35.00, HST included. The government fee is separate and charged at cost: $200.00 to Corporations Canada, or $300.00 to the Ontario Business Registry. Open Corporation for $35 is a department of Gondaliya CPA.
Where the tax questions start
A Canadian corporation is taxed in Canada on its worldwide income, including every US sale. Selling to Americans does not move the corporation, its tax return or its small business deduction to the United States.
What US sales add is a set of separate questions, each with its own answer. Is the sale zero-rated for GST/HST? Does the United States have the right to tax the profit? Does any US state want sales tax collected? Does the shipment owe duty at the border? Each is decided by a different law, and passing one test says nothing about the next.
| Question | Decided by | Usual answer for a small Canadian seller |
|---|---|---|
| GST/HST on the sale | Excise Tax Act, Schedule VI, Part V | Zero-rated when the export rules are met |
| US federal income tax | Canada–US tax treaty, Articles V and VII | Not taxable in the US without a US permanent establishment |
| US state sales tax | Each state’s own law since South Dakota v. Wayfair (2018) | Collect once a state’s economic threshold is passed |
| US customs and duty | US Customs and Border Protection rules and tariffs in force | Depends on the goods, their origin and current tariff actions |
| Canadian income tax | Income Tax Act | Taxed in Canada on worldwide income |
GST/HST on sales to US customers
Most sales to US customers are zero-rated. Zero-rated means GST/HST applies at 0 percent, not that the sale is exempt, so the input tax credits on your Canadian costs remain recoverable.
Goods
Goods you ship to a customer outside Canada are generally zero-rated exports under Part V of Schedule VI to the Excise Tax Act, provided you keep proof that the goods left Canada. GST/HST Memorandum 4.5.2 sets out the conditions.
Services
A service supplied to a non-resident is generally zero-rated under section 7 of Part V of Schedule VI, unless one of the exclusions in paragraphs 7(a) to (h) applies. Services relating to real property in Canada, and services to an individual who is in Canada when dealing with you, are among the exclusions. Advertising services to an unregistered non-resident are zero-rated under section 8.
Digital products and licences
Intangible personal property such as a software licence supplied to an unregistered non-resident is generally zero-rated under section 10, unless it can only be used primarily in Canada or relates to Canadian real property. A subscription that is a service rather than a licence falls under the service rules instead.
Zero-rated sales still count towards the $30,000 small supplier threshold. A corporation selling only to US customers can be required to register for GST/HST while charging no tax at all, and registering lets it recover the GST/HST it pays on Canadian costs.
Our GST/HST registration guide explains the threshold and the timing.
We incorporate for $35.00, HST included
Government fee shown separately at cost. A CPA checks your US sales pattern before you choose a structure.
US income tax and the treaty
The Canada–US tax treaty decides whether the United States can tax your corporation’s business profits. Under Article VII, those profits are taxable in the United States only to the extent they are attributable to a permanent establishment there.
Article V defines a permanent establishment as a fixed place of business through which the business is wholly or partly carried on, such as an office, a branch or a workshop. A dependent agent in the United States who habitually concludes contracts in your corporation’s name also creates one. An independent agent acting in the ordinary course of its own business does not.
The services rule
Article V(9) can create a permanent establishment for services even without an office. It applies where an individual performs services in the United States for more than 183 days in a 12-month period and more than half the corporation’s gross active business revenue comes from those services, or where services are provided in the United States for 183 days or more in a 12-month period on the same or connected projects for US customers.
| Situation | US permanent establishment? |
|---|---|
| Selling online and shipping from Canada | No |
| Consulting performed from Canada for US clients | No |
| A sales representative in the US who signs contracts for you | Usually yes |
| An office or warehouse you control in the US | Yes |
| Staff on a US client site for more than 183 days in 12 months | Possibly, under the services rule |
Forms US payers will ask for
A US customer paying your corporation will usually ask for Form W-8BEN-E. It establishes that your corporation is a foreign entity and can claim treaty benefits, and without it a payer may withhold at 30 percent. Fees for services performed outside the United States are generally not subject to US withholding.
Where a corporation has US activity but relies on the treaty to owe no US tax, the IRS expects a protective Form 1120-F with Form 8833 attached. The penalty for a corporation that fails to disclose a treaty position on Form 8833 is $10,000 for each failure.
US state sales tax
US sales tax is set by each state, not by the federal government. Since the Supreme Court’s decision in South Dakota v. Wayfair in 2018, a state can require a remote seller with no physical presence to collect its sales tax once sales into the state pass an economic threshold.
The most common threshold is $100,000 of sales into the state in a year, but it varies. Alabama uses $250,000, and California and Texas use $500,000. Several states have dropped their old 200-transaction test, including Wyoming, Utah and Illinois.
| How you sell | Who collects the state sales tax |
|---|---|
| Through Amazon, Etsy or another marketplace | The marketplace, under the state’s marketplace facilitator law |
| Through your own website, under a state’s threshold | No one, until you pass the threshold |
| Through your own website, over a state’s threshold | Your corporation, after registering in that state |
State income tax is a separate question. Federal law known as P.L. 86-272 protects sellers of physical goods whose only activity in a state is soliciting orders, but it does not cover services or digital products, and some states question whether it applies to foreign sellers at all.
Customs, duty and tariffs
Goods shipped to US customers cross a border, and the US customs rules have changed sharply since 2025.
The US de minimis exemption, which let shipments valued at US$800 or less enter without duty, was suspended for goods from every country, including Canada, from 29 August 2025. Low-value parcels to US customers now go through formal or informal entry, with duty where it applies.
Goods that qualify as originating under CUSMA can enter the United States at preferential rates. The importer claims the preference and must hold a certification of origin, which needs no prescribed form, only the required data elements on the invoice or a separate document.
US tariffs on Canadian goods have changed many times since 2025, and some tariff actions apply even to goods that qualify under CUSMA. Check the current US Customs and Border Protection guidance for your goods before you price a US order.
On the Canadian side, goods exported to the United States for consumption there need no Canadian export declaration, unless they are controlled, regulated or prohibited goods, which need the appropriate permit. Exports to other countries need a declaration once the shipment is worth CAD$2,000 or more.
Canadian tax on US profits
Your corporation reports its US sales on its T2 in Canadian dollars. Section 261 of the Income Tax Act requires amounts to be converted, usually at the Bank of Canada rate for the day of the transaction. A corporation that keeps its books primarily in US dollars can elect a functional currency on Form T1296, but the election cannot be made again once revoked.
Where the United States does tax some of the profit, because the corporation has a US permanent establishment or a state income tax applies, section 126 provides a foreign tax credit in Canada for the business-income tax paid.
The small business deduction
The small business deduction applies to active business carried on in Canada. A corporation selling goods from Canada with no US permanent establishment generally keeps it. For services, the business is carried on in Canada only to the extent the services are performed in Canada, so work done physically in the United States can fall outside the deduction.
Do not form a US LLC to sell into the United States without advice. The United States treats an LLC as transparent while Canada treats it as a corporation, and the mismatch can leave tax paid twice with no credit. A US corporation or a branch is usually considered instead.
What incorporating costs
Every US selling plan starts with a Canadian corporation, and our fee to form one is fixed. Government fees are charged at cost.
| Item | Amount | HST | Total | Who charges it |
|---|---|---|---|---|
| Our incorporation filing fee | $35.00 | Included | $35.00 | Open Corporation for $35 |
| Federal articles of incorporation, filed online | $200.00 | Not applicable | $200.00 | Corporations Canada |
| Ontario articles of incorporation | $300.00 | Not applicable | $300.00 | Ontario Business Registry |
Our $35.00 fee includes HST and government fees are passed through at cost with no mark-up. Every figure is on our full pricing page. Open Corporation for $35 is a department of Gondaliya CPA.
What a CPA checks before you sell into the United States
This guide explains the rules. How they apply depends on what your corporation sells, how it reaches US customers and where its people work.
We start with the sale itself. Goods, services and digital products follow different GST/HST rules, so we sort your revenue into the categories that decide whether each sale is zero-rated, and confirm the export evidence you need to keep.
Then the treaty. We look at whether anyone acts for you in the United States, whether you will hold inventory or space there, and how many days your people will spend on US client sites, because those facts decide whether a permanent establishment exists.
Then the states. We map where your own-website sales go, which states are close to their thresholds and which sales a marketplace already handles.
Last, the structure. We confirm the forms US customers will ask for, the currency your books should use and whether a US entity is ever worth its cost. Open Corporation for $35 is a department of Gondaliya CPA.
Case studies
Three Canadian corporations selling into the United States, and what we did.
A Shopify store shipping to US customers
The situation: An Ontario corporation selling apparel through its own website had growing US orders and was charging HST on them.
What we did: We confirmed that its shipped exports were zero-rated, kept proof of export on file and mapped its US sales by state against each threshold.
The result:
- HST removed from export sales
- Input tax credits kept
- State thresholds monitored
A software consultant with US clients
The situation: A consultant working from Toronto for two US companies was asked for a W-8BEN-E and worried about US tax.
What we did: We confirmed the work was performed in Canada with no US permanent establishment, completed the form and zero-rated the services as supplies to non-residents.
The result:
- W-8BEN-E provided
- No US withholding
- Services zero-rated
A contractor on a US project
The situation: A Canadian engineering corporation placed two staff on a US client site for most of the year.
What we did: We tested the project against the treaty’s 183-day services rule, prepared a protective US filing and modelled the foreign tax credit in Canada.
The result:
- Permanent establishment risk assessed
- Treaty position disclosed
- Double tax avoided
Book a free consultation call
Selling to US customers or planning a US contract? Bring your sales pattern to a free call. Pick a time below and a Chartered Professional Accountant will call you.
Frequently asked questions
These are the questions owners ask about selling into the United States through a Canadian corporation. Each answer can be read on its own.
Do I charge GST/HST on sales to US customers?
Does my Canadian corporation pay US income tax on US sales?
What is Form W-8BEN-E and do I need it?
Do I have to collect US sales tax?
Can I still ship low-value parcels to the US duty-free?
Should I set up a US LLC to sell into the United States?
Do US sales affect my small business deduction?
What does it cost to incorporate?
The CPAs who review this guide
A Chartered Professional Accountant reviews your structure before anything is filed. Open Corporation for $35 is a department of Gondaliya CPA.
What our clients say
Gondaliya CPA Professional Corporation is registered with CPA Ontario under firm registration number 61330051. Our clients have left us 1,300+ five-star Google reviews, and we work from 13 Ontario offices, open 9:00 AM to 8:30 PM, Monday to Sunday. We back every filing with a 30-day money-back guarantee and a 60-day fee-matching policy, and we are a Xero Partner Award Winner 2026. Open Corporation for $35 is a department of Gondaliya CPA.
These Google reviews belong to Gondaliya CPA Professional Corporation and cover every service the firm provides.
Set up your corporation for US sales
Send the intake form and we will check how you will sell into the United States and which tax rules follow before anything is filed. Our fee is $35.00, HST included, and the government fee is shown separately at cost. Payment is by Interac e-Transfer to info@gondaliyacpa.ca, and the security question is Not Applicable because auto-deposit is enabled.
No legal advice
Gondaliya CPA Professional Corporation is a firm of Chartered Professional Accountants licensed by CPA Ontario, firm registration number 61330051. It is not a law firm. We prepare and file corporate documents and we provide accounting and tax advice. Nothing on this page is legal advice, and reading it creates no solicitor and client relationship. For legal advice on US contracts, US entities or customs rulings, consult a lawyer or licensed customs broker in the relevant jurisdiction.
Open Corporation for $35 is a department of Gondaliya CPA.
