Retailing Tax-Exempt Tobacco

To sell or offer to sell tax-exempt tobacco at retail, you must:

  1. Be located on First Nations land, or be a duty-free shop or ship’s chandler

  2. Hold an Exempt Sale Retail Dealer (ESRD) permit

  3. Purchase tobacco from a registered wholesale dealer authorized to sell tax-exempt tobacco

  4. Only sell to eligible purchasers and record the sale, if required 

  5. Report tax-exempt sales to the province if you are located on First Nations land

If you also sell or offer to sell taxable tobacco, you must hold a valid Tobacco Retail Authorization (TRA).

First Nations Land

First Nations land means reserve land or former reserve land that’s now part of treaty lands. First Nations land does not include Nisga’a lands, Tsawwassen lands or Maa-nulth First Nations lands.

First Nations individuals and bands are generally exempt from tobacco tax when they purchase tobacco on First Nations land. In recognition of this exemption, B.C. has established the Exempt Sale Retail Dealer program.  The goals of the program are to enable the tax exemption for tobacco and to prevent access to purchasers who are not eligible.

Exempt Sale Retail Dealer (ESRD) Permit

If you are located on First Nations land, to apply for an ESRD permit:

  1. Complete the Application for Registration as an Exempt Sale Retail Dealer and/or Exempt Fuel Retailer (FIN 262) (PDF) and submit by mail, courier or fax

  2. Attach the required information and documents, including:

  1. A business plan that contains:

    • A description of the market your business intends to sell to and what tobacco you intend to sell

    • A description of how you will provide secure storage and inventory control for your tobacco inventory

    • A description of how you will provide secure storage for the personal information collected by your business

    • A description of the accounting and inventory control procedures or system(s) you will be using to record exempt sales and monitor tobacco inventory

    • Your business hours

    • Photographs showing your business premises, including where you sell and store your tobacco

    • The name of the tobacco wholesaler who will be supplying your proposed business

  2. First Nations information, including:

    • First Nation or band name and band number of where your business will be located

    • A band council resolution approving the sale of tax-exempt tobacco on First Nations land by your business

    • A brief explanation of how your business will provide convenience to First Nations purchasers compared to the service or supply currently provided by local ESRDs

    • A map showing your business location and the location of other ESRDs in the market area (if known)

ESRD Permit Application Review

You may be issued an ESRD permit if it is required to meet the demand for tax-exempt tobacco by eligible purchasers in your market area. Several factors are considered in your application review, including:

  • The population of First Nations individuals

  • The number and location of existing ESRDs

  • The location of your business in relation to other ESRDs

  • The total allocation of exempt tobacco currently authorized to be sold

  • The sales pattern of existing ESRDs

  • The nature of your proposed business including hours of operation, type of business and whether your business will offer any significant added convenience to potential First Nations customers

  • Other relevant factors

You may be refused an ESRD permit if there are sufficient retailers holding ESRD permits in your market area. 

Duty-Free Shops

If your business is a duty-free shop and you sell or offer to sell tax-exempt tobacco in B.C., you must:

  • Have the proper licence from the federal government to operate a duty-free shop

  • Purchase tax-exempt tobacco from a registered wholesale dealer if the tobacco was manufactured in Canada

Contact us for more information on applying to sell tax-exempt tobacco as a duty-free shop.

 

Last revised: May 16, 2019