Taxes for Canadian Businesses in South Dakota| Empire CPA

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Taxes For Canadian Businesses in South Dakota

July 22, 2021

Question:

What state taxes does a Canadian business pay in South Dakota?

Answer:

Sales Tax

The state sales tax rate in South Dakota is 4.5%. With local taxes, the total sales tax rate is between 4.5% and 7.5%.

Use Tax

The state use tax rate in South Dakota is 4.5%.

Unemployment Insurance (Payroll Tax)

If you have employees working in South Dakota, you must pay unemployment taxes on their gross wages up to the taxable wage base ($15,000 for 2021). The tax rate varies from 0% to 9.5% depending on your experience rating. The tax rate for new employers is 1.2%.

Corporate Income Tax

There is no corporate income tax in South Dakota.

Discussion:

If you remain under certain thresholds in this state, you are not responsible for taxes.

Tax	Threshold
Sales	$100,000 or 200 separate transactions
Use	$100,000

Availability of Treaty Benefits

Use taxes are often treated as income taxes by the Canadian government when calculating income in Canada and applying for foreign tax credits. Meaning, if you pay use tax in the USA but have no net profit, you will not benefit from a tax credit theoretically. The actual application is a bit more complex.

Income taxes in the USA are almost always treated as income taxes by the Canadian government. Thus, in the majority of cases, if you pay tax in the state, you don’t pay tax again in Canada unless the Canadian rate is higher.

If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.

Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.