11 Oct GST on Remote Services
Many of us use products such as software as a service to help run our businesses. More often than not, these services are provided by offshore suppliers.
From 1 Oct 16 GST is being charged by many (but not all) offshore suppliers of remote services. This means GST will be charged on things like Microsoft Office 365 subscriptions, Adobe software and advertising through the likes of Google or Facebook. In some instances, GST may also be charged by outsourced service companies from overseas.
Unfortunately, presently the IRD aren’t allowing these transactions to be treated in the same manner as you would if you were purchasing a service that was inclusive of GST in NZ.
The problem is that the way the GST charge has been implemented, it is up to you to stop GST being charged to your GST registered business. Why we are drawing this change to your attention is the IRD say that even for GST registered persons or businesses, if you pay this GST, you can’t claim it back. If you want to check out what the IRD say about this click here.
Some offshore suppliers will not charge NZ GST, but many of the big names such as Microsoft are. You need to check with your offshore suppliers.
The onus is on you to inform your offshore suppliers that you are GST registered. If you do this, your suppliers won’t have to charge you GST. Having said that, for many offshore suppliers, it is unclear if they are even GST registered in the first place. Because of this, we suggest that you inform all of your offshore suppliers of services that you are GST registered and provide them with your GST number.
Thus far, it seems that different suppliers have slightly different methods for ‘informing’ them that you are GST registered. For example, Microsoft requires you to log in via it’s admin portal. Adobe sees to use a similar procedure. We expect that most offshore suppliers of digital services will do this through their ‘admin’ or ‘billing’ portals.
The important thing is, if you are So you need to take action by advising the remote digital supplier of your GST number.
