Manitoba Extends Retail Sales Tax to Cloud Services in 2026

December 18, 2025

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Manitoba, Canada's fifth-most populous province, passed its 2025-2026 Budget, which, among other matters, extends its Retail Sales Tax to cloud computing services, marking a significant update to the province's taxation of digital transactions. This measure reflects Manitoba’s intention to modernize the tax framework to better capture economic activity in an increasingly digital and cloud-based economy.

Impact on Cloud Computing Services Providers

Starting from January 1, 2026, Manitoba will require cloud computing service providers to collect and remit Retail Sales Tax on services supplied to customers in the province. Up to this point, Manitoba did not impose Retail Sales Tax on access to software hosted on servers located outside the province, even when used by customers within Manitoba.

However, with new rules in place, the province is shifting its focus from the physical location of the software infrastructure to the place where the service is accessed or used. Thus, local regulators decided to broaden the tax base and include cloud services consumed by Manitoba users. Consequently, starting from 2026, the scope of Retail Sales Tax will be extended to include out-of-province and foreign service providers that supply cloud-based services to Manitoba customers.

New Retail Sales Tax rules apply broadly to cloud-based services such as software, platform, and infrastructure services delivered over the internet, covering everything from subscription-based software and video games to data storage, virtual servers, network infrastructure, and development platforms.

Conclusion

Cloud-based service providers, such as SaaS, IaaS, and PaaS, that supply customers in Manitoba now face new Retail Sales Tax registration and collection obligations starting January 1, 2026, and should take the necessary steps to prepare.

The preparation for new requirements goes beyond Retail Sales Tax registration. Moreover, it includes assessing and updating billing systems, adapting internal tax compliance procedures, and implementing the necessary operational changes to ensure accurate tax collection and timely remittance under the new rules.

Source: Manitoba Finance - Computer Software and Online Services

What change did Manitoba introduce in its 2025–2026 Budget regarding cloud computing?

Manitoba extended its Retail Sales Tax to cloud computing services, updating its tax framework to capture digital and cloud-based economic activity more effectively.

When do the new Manitoba Retail Sales Tax rules for cloud services take effect?

The new rules apply starting January 1, 2026, from which point cloud computing service providers must collect and remit Retail Sales Tax on taxable supplies to Manitoba customers.

How did Manitoba tax cloud-based software before 2026?

Before 2026, Manitoba did not impose Retail Sales Tax on access to software hosted on servers located outside the province, even if Manitoba customers used the software.

What is the key shift in Manitoba’s approach to taxing cloud services?

Manitoba shifted its focus from where the software infrastructure is physically located to where the service is accessed or used, bringing cloud services consumed in Manitoba into the tax base.

Which cloud computing services are covered by the new Retail Sales Tax rules?

The rules broadly apply to SaaS, PaaS, and IaaS offerings, including subscription software, video games, data storage, virtual servers, network infrastructure, and development platforms delivered over the internet.

What should cloud service providers do to prepare for Manitoba’s new RST obligations?

Providers should prepare by registering for Retail Sales Tax where required, reviewing and updating billing systems, adjusting internal tax compliance processes, and ensuring accurate collection and timely remittance under the new rules.

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