Marketplace facilitators like DoorDash connect buyers with sellers. When merchants sell goods on the DoorDash platform, they may be required to collect and remit tax on those orders. Some jurisdictions have tax laws that shift certain tax remittance responsibilities from merchants to DoorDash. These marketplace facilitator laws affect how taxes are handled on the platform and how merchants payouts are calculated. In the article below, we’ll walk through specifics on the marketplace facilitator rules, the jurisdictions they relate to, and what this means for merchant tax reporting obligations.
What is a marketplace facilitator?
In general terms, a marketplace facilitator is a platform like DoorDash that connects buyers and sellers to help facilitate the sale of various goods and services, including food, drinks, groceries, and other retail items.
How do marketplace facilitator laws impact tax?
In some jurisdictions, there are laws that change the party that is responsible for remitting tax on sales made between buyers and sellers on a marketplace facilitator’s platform. These laws shift the responsibility for tax remittance from merchants to DoorDash, as the marketplace facilitator. In these jurisdictions, listed below, DoorDash remits directly to the tax authorities the provincial sales tax (PST) and retail sales tax (RST) on the merchant’s sales made through the DoorDash platform. The only exception is the Saskatchewan PST on liquor sales, which DoorDash always passes to merchants. DoorDash also always passes to merchants the goods and services tax (GST), harmonized sales tax (HST), and Quebec sales tax (QST) collected on merchant’s sales made through the DoorDash platform.
In which jurisdictions does DoorDash remit tax directly to the tax authorities as a marketplace facilitator?
DoorDash is registered to collect and remit tax directly to the tax authorities as a marketplace facilitator on orders made through the DoorDash platform in the following jurisdictions:
How do the marketplace facilitator laws affect my payouts?
Merchant payouts will include any taxes that DoorDash collects but does not remit directly to the tax authorities. Merchant payouts will exclude any taxes that DoorDash collects and remits directly to tax authorities.
For details on which taxes DoorDash remits and which are passed through to the merchant, see the sections above.
Where can I view the tax that DoorDash passed to me or remitted directly to the tax authorities for my orders?
Merchants can view the tax that DoorDash passed to merchants or remitted directly to the tax authorities in the transaction breakdown report.
To view a breakdown of which taxes were passed to merchants or remitted directly to the tax authorities for each order, see the Transactions breakdown report:
Tax Subtotal: The adjusted subtotal based on customer discounts.
Subtotal Tax Passed to Merchant (Federal/Harmonized): This is the subtotal GST/HST (as applicable) that DoorDash collected from the customer and passed to merchant.
Subtotal Tax Passed to Merchant (Provincial): This is the subtotal PST/RST/QST (as applicable) that DoorDash collected from the customer and passed to merchant.
Subtotal Tax Remitted by DoorDash to Tax Authorities: This is the subtotal tax that DoorDash collected from the customer and remitted directly to the tax authorities.
To view the PST/RST that DoorDash remitted directly to the tax authorities for each order, see the Transactions report, column “Subtotal Tax Remitted by DoorDash to Tax Authorities”.
To view the PST/RST that DoorDash remitted directly to the tax authorities for each payout, see the Payouts report, column “Subtotal Tax Remitted by DoorDash to Tax Authorities”.
Please see this How to Utilize DoorDash Reporting to download Transactions and Payouts reports from the Merchant Portal.
Do the marketplace facilitator laws affect GST, HST, or QST?
No. The marketplace facilitator laws do not currently affect GST, HST, or QST. DoorDash always passes to merchants the GST, HST, and QST collected on merchant’s sales made through the DoorDash platform.
For which DoorDash products will DoorDash collect and remit PST/RST directly to the tax authorities as a marketplace facilitator?
In jurisdictions where DoorDash is required to collect and remit tax as a marketplace facilitator, DoorDash will collect and remit PST and RST directly to the tax authorities on applicable sales facilitated in the jurisdictions listed above for Marketplace, Self-Delivery, Flexible Fulfillment, and Online Ordering. DoorDash does not collect and remit tax directly to the tax authorities for Drive On-Demand.
Who is responsible for setting tax rates on my menu items?
DoorDash is generally responsible for setting tax rates on merchant menu items in the jurisdictions in the Marketplace Facilitator List. Merchants are responsible for setting tax rates on merchant menu items in all other jurisdictions. For more information, head to How to Update the Tax Rates of Your Menu Items and Store.
How does the process differ for point-of-sale (POS) integrations?
There is no difference in tax payouts and tax remittance for POS integrations. DoorDash continues to handle all tax calculations where applicable. Merchants with POS integrations can access the Merchant Portal for reporting information. For more information, head to How to Update the Tax Rates of Your Menu Items and Store.
Can DoorDash send a letter to me confirming that DoorDash remits tax directly to the tax authorities for my store?
Yes, please contact DoorDash Merchant Support to submit a request.
How should I report my taxes?
DoorDash is unable to provide tax or legal advice. DoorDash recommends that merchants contact a tax professional.
What if I’m located in the United States?
For information on the marketplace facilitator laws in the United States, please see the US marketplace facilitator guide. Still have questions? Check out How to Access and Understand Your Tax Invoices or contact DoorDash Merchant Support.
What if I’m located in Australia, or New Zealand?
Australia and New Zealand do not have marketplace facilitator laws that impact sales made through the DoorDash platform. Merchants in Australia and New Zealand are responsible for remitting all tax on sales made through the DoorDash platform.
Marketplace facilitator laws have changed the landscape of online sales, making platforms like DoorDash responsible for tax remittance in select jurisdictions. This shift has implications for merchant payouts and tax compliance, emphasizing the need for adaptability and awareness in the evolving e-commerce environment. This is why it’s important to speak with a tax professional to make sure you’re adhering to the current legal standards.
Still have questions?
If you have any questions, please submit a help ticket on the Merchant Portal.
