Current VAT Rate in Canada (2025)

Current VAT Rates

Historical VAT Rate Changes

• 2025: Current standard rate of 5%
• Historical data being compiled

Economic Impact

VAT contributes approximately 20-30% to Canada's total tax revenue. The current rate structure balances revenue generation with economic competitiveness within the Americas region.

Zero-Rated Items

The following items are zero-rated for VAT in Canada:

• Exports of goods and services
• International transportation
• Some basic food items
• Children's clothing
• Books and newspapers
• Prescription medications

VAT Exempt Items

The following are exempt from VAT in Canada (no VAT charged, no input VAT recovery):

• Financial services
• Insurance services
• Healthcare and medical services
• Education and training
• Postal services
• Charitable activities

Reduced Rate Applications

Items subject to reduced VAT rates in Canada:

• No reduced rates apply in this country

VAT Registration

• Registration Threshold: 30,000 CAD annual turnover
• Voluntary Registration: Available below threshold
• Registration Process: Online via tax authority website
• Processing Time: Typically 2-4 weeks

VAT Returns and Payment

• Filing Frequency: Varies
• Filing Deadline: End of month following period
• Payment Methods: Bank transfer, online payment
• Late Filing Penalties: Varies by amount and delay

Cross-Border Trade

Special considerations for international transactions:

• Intra-EU Trade: Not applicable (non-EU country)
• Imports: VAT payable at point of entry
• Exports: Generally zero-rated
• Digital Services: Special rules may apply

For background on how the buyer accounts for VAT on intra-EU and cross-border B2B supplies, see the reverse charge mechanism. For B2C digital sales and low-value imports, see VAT on digital services and cross-border e-commerce.

Nearby Countries

What is the current VAT rate in Canada?

The standard VAT rate in Canada is 5% as of 2025. This applies to most goods and services unless they qualify for reduced rates or exemptions.

How do I calculate VAT in Canada?

To add VAT: multiply the net amount by 5%. To remove VAT from a gross amount: divide by 1.05. Use our calculator above for instant results.

Who needs to register for VAT in Canada?

Businesses with annual turnover exceeding 30,000 CAD must register for VAT. Voluntary registration is available for businesses below this threshold.

Can I reclaim VAT in Canada?

VAT-registered businesses can generally reclaim input VAT on business purchases. Non-EU tourists may claim VAT refunds on qualifying purchases when leaving the country — see our guide to VAT refunds for tourists and non-resident businesses.