Effective January 1, 2026, charges for cloud computing services as well as computer software when they are purchased for use on a device or by an individual that is ordinarily situated in Manitoba will be subject to Manitoba Retail Sales Tax (RST).
Previous to that date, computer software was taxable only when the software is installed on a device located in Manitoba. Software installed on a server located outside Manitoba that was merely accessed remotely from a user in Manitoba was not taxable. Customers and computer software, including in Manitoba, who may have to self-assess the RST on some of their purchases.
The Manitoba tax authorities provide the additional guidance:
- Mobile phones are considered to be ordinarily situated in Manitoba if they are assigned a Manitoba area code.
- When computer software or cloud computing services are purchased for use both inside and outside Manitoba, the RST may be prorated for the portion of software or cloud computing services that is reasonably allocated for use in Manitoba. For example, the tax may be prorated based on the number of users in Manitoba compared to the total number of users across the organization.
- Cloud computing services include:
- Software as a service;
- Platform as a service; and
- Infrastructure as a service.
- Data processing, data back-up or information retrieval services that were previously considered tax exempt services will be subject to RST effective January 1, 2026 when provided as a cloud computing service.
- Video game subscription services, cloud storage services and website hosting services are examples of cloud computing services.
This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.
Frédéric Pansieri
Partner,
Indirect Tax
Frédéric Pansieri Professional Corporation