MANITOBA RST EXTENDED TO CLOUD SERVICES
PROVINCE CONTINUES TREND OF IMPOSING PST ON CLOUD SERVICES
We have previously written about Manitoba’s proposal to extend coverage of its Retail Sales Tax (“RST”) to cloud services here. With the recent enactment of Bill 46 on November 6, 2025, Software as a Service (“SaaS”), Platform as a Service (“PaaS”), and Infrastructure as a Service (“IaaS”), will be subject to Manitoba’s 7% RST starting January 1, 2026.
Manitoba now becomes the latest member of Western Canada to subject cloud services to provincial sales tax (“PST”), joining British Columbia (“BC”) and Saskatchewan (“SK”).
Background: Taxation of Cloud Services in Western Canada
In May of 2024, BC was the first to extend PST to cloud services through amendments to its Provincial Sales Tax Act, explicitly including SaaS, IaaS, and Application Programming Interfaces (“APIs”) within the definition of softwareon a retroactive basis.
Following suit the same month, SK’s Ministry of Finance indicated in PST Bulletin 7 that its PST applies to SaaS, PaaS, and IaaS when these services are consumed or used in Saskatchewan. As a result, providers of SaaS, PaaS and IaaS solutions located in SK are required to pay the applicable PST on taxable computer hardware, software and services acquired for their own use or for use in providing their services.
Manitoba subsequently published bulletin RST 033 in March of 2025, containing definitions and treatment of SaaS, PaaS, and IaaS closely aligning to those in SK’s PST Bulletin 7:
- SaaS: the provision of ready-to-use software applications over the internet, with the provider managing all aspects of the software, including infrastructure, application, and data.
- PaaS: the provision of hardware and software resources to develop applications through the cloud.
- IaaS: the provision of on-demand infrastructure via the cloud, such as compute, processing, storage, networking, and virtualization.
How Manitoba’s RST Captures Cloud Services
Cloud services such as SaaS, PaaS, and IaaS are not expressly targeted by the amendments to The Retail Sales Tax Act (“RSTA”) in Part 6 of Bill 46 (the “Amendments”). However, the Amendments significantly expand the definitions of “software” and “use” in s. 1(1) of the RSTA, such that SaaS, PaaS, and IaaS would be captured.
The Amendments also augment s. 1(1.2) RSTA “retail sale in the province” interpretation with a new deeming provision in relation to software. New s. 1(1.2.1) RSTA deems software to be delivered in Manitoba for the purposes of s. 1(1.2)(a)(i) if:
- it is purchased in Manitoba;
- it is purchased for use on, through or with an electronic device ordinarily situated in Manitoba; or
- the purchaser is ordinarily resident in Manitoba.
Manitoba has become the latest member of Western Canada to tax cloud services.
Starting January 1, 2026, Manitoba's 7% RST will apply to SaaS, PaaS, and IaaS.
Takeaways
Staring in the new year, resident and non-resident providers of cloud services must collect RST, and Manitoba-based providers must self-assess RST on inputs like software and hardware used to deliver these services.
Businesses uncertain of how the Amendments affect them should contact experienced indirect tax counsel for advice regarding their cloud services RST collection and remittance obligations.
For help with Manitoba's RST amendments, please click here.
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