Google to Charge GST on Advertising

From 1 November 2018, Google Ads charges will incur a 15% New Zealand Goods and Services Tax (GST) — additional to click charges — for all advertisers located in New Zealand. From that date, Google Ads services will be provided from Google’s newly created subsidiary: Google New Zealand Limited. Currently GST is not charged as the service is provided from outside of New Zealand by Google Asia Pacific Pte. Ltd.

This change follows the passing of a law in New Zealand aimed at collecting millions of dollars of unpaid tax from multinational corporations who have historically used tactics to reduce the tax they pay in NZ. The change follows on the heels of the introduction last year of GST to Google advertisers in Australia.

Because GST is returned to Inland Revenue on a net basis (i.e. GST collected minus GST paid out) this will have a neutral effect on any GST-registered businesses in New Zealand.  Even though you will now have to pay GST to Google, this means less will be payable to the IRD within each GST return period. For any businesses or private individuals not registered for GST, and therefore unable to claim the GST back, this will be an additional cost to their marketing spend payable to Google.

There is nothing that you need to do to adjust your campaign settings in relation to this change. As GST is an additional charge, your Google Ads campaign budgets and Cost Per Click (CPC) rates will remain unchanged. You will however notice that invoices will be issued by Google New Zealand Limited. If you pay by invoice, please make sure that you send payments using the new remittance information.

Should you have any concerns or questions about this tax change, please contact your tax advisor.