GST on Google Ads & the “Amazon Tax”

Google and GSTRetailers in NZ have been suffering for years due to the advantages that offshore online retailers have over them. One of those advantages is coming to an end with the introduction of GST requirements for offshore businesses.

From November 2018 onwards, charges for Google Advertising clicks or impressions must include GST. Previously, Google’s ad charges (like all offshore products and services) included no GST and were considered an overseas business that was not liable for GST. That’s not all, there are more GST changes to follow in 2019 which will affect online shopping in particular. Keep reading for the most important updates and things you need to know.

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From November 1st 2018, “Google New Zealand Limited is required by law to charge 15% GST (Goods and Services Tax) on its services”.

Welcome Google New Zealand

Until now, the services you were using were provided through Google Asia Pacific Pte. Ltd. Google Ads business accounts were invoiced from the Singapore office and therefore exempt from New Zealand tax law. However, with charging being issued by Google New Zealand, the company will be required to pay local taxes, while its services become subject to GST. This change will affect any Google Ads accounts that reside in New Zealand.

What does this mean?

For Google, it simply means that rather than Google Singapore earning all the revenue from contracts created with New Zealand businesses, the revenue will soon go straight to Google New Zealand, which will also pay tax to our government (Link: ).

For you, as a user of Google Ads, not much is going to change for now. However, you will need to update your accounting or bookkeeping software to ensure you can account for GST with Google Ads once the change comes into effect. You will also need to retain all your Google Ads expenditures prior to November that has no GST included. If in doubt, talk to your accountant and get professional advice on how to proceed.

Changes in 2019

The most significant change regarding GST will come into effect in October next year. The government has recently introduced new laws which will require overseas retailers to charge GST on low-value goods sold to New Zealanders online. That includes the most prominent online shopping platform, Amazon.

According to financial experts, this move will mean an additional $235 million in taxes for the government, growing to almost 4 times as much over the next few years due to the increase in online shopping.

The “Amazon Tax” – Fairer rules for everyone

At the moment most overseas items under $400 are available to New Zealand consumers tax-free. Starting in October 2019, international companies such as Amazon will have to register with IRD and collect GST from Kiwis at the point of sale if their total sales in this country exceed $60,000 per annum. It’s the same threshold that applies to domestic businesses.

Potentially this change could help you save money in the long run. At the moment you might get items tax-free, but will be charged for customs tariffs, import duty or border security and biosecurity fees. Under the new law, all these fees will be dropped and you just pay 15% GST on top of the retail price.

Small Business and Revenue Minister Stuart Nash believes this new law will do more than just make things fairer for local and domestic retailers. According to an interview he conducted earlier this year with Radio NZ it will also simplify the whole process for consumers and businesses alike.

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