Cloud Services And Provincial Sales Tax

It only got a single line in Manitoba's 2025 budget - unlike housing measures that came with charts and headlines - but the new provincial sales tax on cloud services could bring just as much fiscal weight. As part of its 2025 budget, Manitoba announced it will apply its 7% Provincial Sales Tax ("PST") to Software as a Service ("SaaS"), Platform as a Service ("PaaS"), and Infrastructure as a Service ("IaaS"), starting January 1, 2026.

Manitoba is the latest to adopt this trend, following BC (which we wrote about here) and Saskatchewan*. The message across Western Canada is clear: cloud services are in the "net tax"!

BC and Saskatchewan – Setting the Stage

BC was the first to expressly address this issue. In response to BC Supreme Court decision in Hootsuite Inc. v. British Columbia (Finance) case, the 2024 BC budget introduced legislative amendments to the BC Provincial Sales Tax Act, explicitly including SaaS, IaaS, and Application Programming Interfaces