Tobacco Vender Licensing and Taxation

All tobacco manufacturers, wholesalers and retailers operating in PEI must be licensed with the Provincial Tax Commissioner. It is illegal to sell or offer tobacco in PEI if you are not licensed and it is illegal to purchase tobacco products from someone who is not a licensed retailer.

Licence requirements vary according to the type of licence, for example:

• Tobacco manufacturers must include a request for a tobacco marking permit or exemption permit when they fill out their licence application.
• Tobacco wholesalers may be required to deposit a bond in the form of cash or other approved security  in the amount ranging from $5,000 minimum to a maximum amount equal to six times the estimated monthly tax collected. The tax commissioner may apply to the bond if the wholesale vendor fails to collect or remit tax as required under the Tobacco Tax Act.  
• Tobacco retailers must attach a copy of the certificate of incorporation, if applicable and are required to prominently display a copy of the licence certificate and each retail location covered under the licence. The retailer must re-submit the licence application to apply for an amendment any time they add a new tobacco-sales location.

Licences and permits are not transferable. The Provincial Tax Commissioner has the authority to suspend, cancel or refuse to issue a licence or permit if the licence holder or applicant is convicted of a violation of or failure to comply with the provisions of the Tobacco Tax Act, Revenue Administration Act or any tobacco-related provision  of any other provincial or federal legislation. 

 To begin the licensing process, submit a completed application as follows:

• Manufacturers and wholesalers: Application for a Tobacco Manufacturer’s Wholesale Vendor’s License and/or Marking/Marking Exemption Permit 
• Tobacco Retailers: Application for a Tobacco Retail Vendor’s License

What are my tax responsibilities as a licensed tobacco vendor?

A tobacco wholesaler collects the tax from the retailers at the time of inventory distribution (sale). Retailers are reimbursed for the tax when they collect it from the consumer. Wholesalers must file a monthly return even if no tax is payable and remit tax owing to the Province within 15 days after the end of the period covered by the return. Calculate the tax owing by either the sales method or the purchase method as provided on the Registered Wholesaler Vendors’ Tobacco Return.

When does the Province issue a tobacco tax refund?

A tobacco manufacturer, wholesaler, or retailer may request a refund for tobacco tax paid in error or in excess of the amount due. The application for refund must clearly specify the reason(s) for the tax refund and include all original invoices, receipts, and other supporting documents related to the refund request. Request for Tobacco Tax Refund.

What happens when the tobacco tax rate changes?

Any time there is important information regarding tax collection or remittance, i.e. proposed rate change or actual rate change, a formal Tobacco Tax Notice is issued to licensed vendors by mail or email and posted  to the website.

Wholesalers:

Tobacco wholesalers must collect the new rates of tax on all sales or deliveries effective 12:01 a.m. on the date of the tobacco tax change. For any sales or deliveries invoiced at the old rate of tax after that date, the wholesaler is required to issue an adjusting invoice for the new tax rate.

If you maintain tax-paid inventories, you must calculate and either self-declare and remit tobacco tax due or request refund for tobacco tax paid on any tobacco inventory on hand at the close of business on the day immediately preceding the date of change in the tobacco tax rate, including all tobacco inventory:

• At your place of business;
• Under your control of the wholesaler; and
• In transit to a retailer with an invoice date on or after the date of the rate change.

In the event of a tax increase, you must report and remit the additional tobacco tax due within 15 days of the date of the tax increase.  Submit a completed Tobacco Tax Self-declaration.

In the event of a tax decrease, a Request for Refund of Tobacco Tax form will be issued. You must submit the completed form within 30 days of the date of the rate change.

Retailers:

Tobacco retailers are required to calculate and report the additional tax due on tobacco inventory on hand at the close of business on the day immediately preceding the date of the change of tax rate. 

On-hand tobacco inventory includes any cigarettes, tobacco sticks, fine cut tobacco and other tobacco products, except cigars, the retailer has:

• At their place of business; 
• Under their control, i.e. store display areas, storerooms; and other on-site and off-site storage locations; and
• Received on or after the rate change date that was invoiced at the old tax rate by the wholesaler.

You must report and remit the additional tobacco tax due within 15 days of the date of the tax increase.  Submit a completed Tobacco Tax Self-declaration.

In the event of a tax decrease, a Request for Refund of Tobacco Tax form will be issued. You must submit the completed form within 30 days of the date of the rate change.

Wholesalers and retailers may be randomly selected for audit to ensure compliance with self-declaration and refund procedures.