globaltaxnews.ey.comSign up for tax alert emailsPrintDownload | ||||||||
25 February 2026 Canada | British Columbia budget proposes to expand provincial sales tax to certain professional services
The Government of British Columbia (BC) announced changes in its 2026 budget (BC Budget) that would expand the provincial sales tax (PST) base to include certain professional services, effective 1 October 2026, subject to Bill 2, Budget Measures Implementation Act, 2026 (Bill 2) receiving Royal Assent. (For information on the other tax measures announced in the 2026 BC Budget, see EY Global Tax Alert, Canada | British Columbia budget 2026, dated 20 February 2026.) If enacted as proposed, businesses making supplies of the newly listed professional services will generally be required to register to charge, collect and remit PST at a rate of 7%, with the exception of architectural, engineering and geoscience services, which will be subject to a special taxable-base rule under which PST will apply to only 30% of the purchase price of those services. The BC Budget states that the tax measures announced are intended to "increase provincial revenue by updating taxes" to strengthen the province's fiscal outlook and protect critical services, noting fiscal pressures from global uncertainty, slowing growth and high costs. The province also states that expanding BC's PST base to these professional services "is generally consistent with how tax applies to these services in most provinces." For example, Saskatchewan and Manitoba currently impose PST on similar professional services, such as accounting and engineering. The BC Budget notes that BC's economy has shifted significantly toward services, which the provincial government considers to "have largely remained untaxed under the PST."1 The BC Budget proposes to apply PST at a rate of 7% to the following services, effective 1 October 2026:
As noted above, PST on architectural, engineering and geoscience services will apply to 30% of the purchase price of those services. Generally, the proposed definition for each of these services under Bill 2 refers to other statutes governing the practice of that professional service (e.g., the Security Services Act, the Real Estate Services Act) with the exception of accounting services. As noted in Notice 2026-001: Notice to providers of professional services (Notice 2026-001), if a business provides any of the new taxable professional services on or after 1 October 2026, the business will generally be required to register to charge and collect PST, unless a specific exemption applies. Notice 2026-001 further indicates that registration may occur up to six months before the first taxable sale. For example, a business that will first sell new taxable professional services on 1 October 2026 may register as of 1 April 2026, but not earlier. If enacted as proposed, purchasers of the newly taxable professional services should expect PST to apply on or after 1 October 2026, subject to applicable exemptions, thereby increasing the overall cost of affected services. For architectural, engineering and geoscience services, the proposed "30% of purchase price" rule will require purchasers to validate how PST is computed on invoices, particularly for projects involving multiple categories of services. In addition, the transitional rules for professional services under Bill 2 provide that consideration for such services that, before 1 October 2026, becomes due or is paid without having become due will not be subject to PST. Accordingly, purchasers with ongoing engagements may benefit from working with service providers to have invoices rendered for work performed before 1 October 2026. In Bill 2, "architectural services" and "engineering services" are defined with reference to professional regulations and registration requirements. More specifically, the definition of "architectural services" includes "advice or services within the practice of architecture, as defined in the Architects Regulation, B.C. Reg. 33/2023, provided by a person who is registered or required to be registered under the Professional Governance Act with the Architectural Institute of British Columbia." Similarly, the definition of "engineering services" includes "advice or services within the practice of professional engineering or the practice of professional geoscience, as defined in the Engineers and Geoscientists Regulation, B.C. Reg. 14/2021, provided by a person who is registered or required to be registered under the Professional Governance Act with the Association of Professional Engineers and Geoscientists of the Province of British Columbia." In other provinces with similar PST regimes, the scope of such services is also generally framed with similar references to regulated provincial professional practices. For example, Saskatchewan's administrative guidance describes "engineering and geoscience services" as those provided by a person conducting the "practice of professional engineering" or the "practice of professional geoscience" as defined in The Engineering and Geoscience Professions Act, and "architectural services" as those provided by a person conducting the "practice of architecture" as defined in The Architects Act, 1996.3 Manitoba's information bulletins similarly describe "engineering design services" as design services provided by an engineer as defined in The Engineering and Geoscientific Professions Act of Manitoba,4 and "architectural design services" as design services defined in The Architects Act of Manitoba.5 The BC government has stated that further information on how PST and exemptions apply to the affected professional services will be provided once the associated regulations are released, and that notices will be updated as more information becomes available. Businesses that provide or purchase the affected professional services should consider the lead time required to:
Document ID: 2026-0518 | ||||||||
