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There is no universal “reverse-charge GST” payment. The correct tax rate, eligibility test, return box and payment route depend on where the recipient is established. Identify the country first, then determine whether the imported service is in scope, calculate the local tax on the required value, report it in that country’s return and pay any net amount by the tax authority’s deadline.
Why the country must come first
Reverse charge shifts the accounting responsibility from an overseas supplier to the customer. Instead of the foreign supplier charging local consumption tax, the recipient calculates the tax that would have applied to a comparable domestic supply and reports it to the local authority. The customer may then be able to claim some or all of that amount as input tax, but only under the ordinary deduction rules for that jurisdiction.
That mechanism is not harmonised worldwide. New Zealand, Australia and Singapore use different scope tests and return fields. The United Kingdom has a comparable mechanism for VAT, not GST, with its own boxes and currency rule. A procedure that is correct in one country can produce an incorrect return in another.
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- Australia: the purchaser decides whether GST is payable on imported services, digital products or low-value imported goods rather than assuming the overseas supplier will charge it.
- Singapore: reverse charge generally targets GST-registered businesses that cannot claim full input tax because of exempt supplies or non-business receipts, subject to exclusions.
- United Kingdom: qualifying imported services are dealt with under VAT reverse charge; the figures go into VAT return boxes, not GST boxes.
The sections below are separate examples, not one combined set of rules. Use the section for the country in which the recipient’s tax obligation arises and check the current authority guidance and return form before filing.
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The four checks before you calculate anything
1. Establish the recipient’s jurisdiction and registration status
Start with the business or other recipient that bought the service, not the location of the supplier’s website or bank account. Establish where the recipient is registered or required to register for the relevant consumption tax, and whether it is already registered. A non-registered entity can still have an obligation in some systems, while other systems use registration status as part of the reverse-charge test.
2. Identify the supplier and the service
Keep the supplier’s legal name and address, the invoice, a description of what was supplied and the date or period of supply. Determine whether the supplier is outside the recipient’s country and whether the item is a service, a digital product or (where the local rules include them) a low-value imported good. Do not assume every overseas purchase is covered: each authority has exclusions and place-of-supply conditions.
3. Test taxable or business use
Document how the purchase is used. The relevant question may be the percentage of taxable use, whether the recipient makes exempt supplies, whether there are non-business receipts, or whether input tax would otherwise be fully recoverable. Mixed use can create a reverse-charge liability or restrict the input-tax claim even when the same transaction would be fully offset for a wholly taxable business.
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4. Confirm the tax point, value and currency treatment
Use the local authority’s rule for when the tax becomes due and what value is taxed. Keep the original currency and the conversion method used. Do not copy a currency rule from another country: the United Kingdom, for example, expressly requires conversion into sterling for its VAT return, while the GST examples below do not establish a single cross-country conversion method.
New Zealand: 15% reverse charge when taxable use is below 95%
When the rule can apply
Inland Revenue’s “Special supplies” guidance covers certain services imported into New Zealand. Its examples include management, legal and accounting services, and products downloaded online. The reverse charge applies when the stated supply conditions are met and the intended or actual taxable use is less than 95% of total use. A service used entirely or almost entirely for taxable activity may therefore be treated differently from one used for exempt or private purposes.
The person liable under the reverse charge is treated as the supplier for registration, output-tax payment and recordkeeping purposes. That does not turn every overseas invoice into a New Zealand taxable supply; the service and the parties still have to satisfy the guidance’s conditions.
How to calculate the amount
The official guidance states: “The reverse charge requires you to pay GST of 15% based on the price of the services.” Apply 15% to the relevant service price under the New Zealand rules. For example, if the taxable base is NZ$1,000, the reverse-charge GST is NZ$150. The example is arithmetic only; confirm which amount constitutes the price, and which date and currency conversion apply, before using it in a return.
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- Confirm that the imported service and your intended or actual use meet the reverse-charge conditions, including the below-95% taxable-use test.
- Determine the service price and calculate 15% GST.
- Include the resulting GST in the New Zealand GST return for the period in which the liability arises.
- Pay the amount due to Inland Revenue using the payment method and due date shown for your filing period. The guidance says the amount is included in the return and paid to Inland Revenue; it does not create a separate overseas-supplier payment.
- Retain the supplier invoice, service description, use calculation, currency working papers and return records required by New Zealand rules.
Whether any corresponding input-tax deduction is available is a separate question governed by the normal New Zealand deduction rules. Do not reduce the output tax merely because the service supports the business; establish the permitted recovery before offsetting anything.
Australia: decide whether GST is payable on the imported purchase
What the Australian overview says
The Australian Taxation Office says a GST-registered Australian business importing services, digital products or low-value imported goods should not be charged GST by the overseas supplier. The Australian business must decide whether GST is payable and, if it is, pay the GST owing under reverse-charge rules. The ATO also says an Australian business that is not GST-registered will need to pay GST on purchases of these imported services, digital products and low-value imported goods.
This is an overview rather than a blanket rule for every invoice. Confirm that the particular supply falls within the Australian imported-supply provisions, check any exclusion, and establish whether the customer is registered before preparing the activity statement.
A practical Australian workflow
- Collect the overseas supplier’s invoice and identify whether the purchase is a service, digital product or low-value imported good covered by the Australian rules.
- Check the customer’s GST-registration status and whether the supply is connected with the business or another taxable activity.
- Use the ATO’s current guidance to determine whether the purchase is subject to reverse charge and which value and rate apply. The available overview does not establish a single rate or return label for every type of imported purchase.
- Calculate the GST liability in Australian dollars using the applicable Australian conversion and tax-point rules.
- Enter the output-tax amount and any permitted input-tax claim in the current activity statement fields specified by the ATO.
- Pay any net amount through the ATO payment channel and by the activity-statement due date. Keep the calculation and evidence supporting the decision.
The ATO page used for this overview was last updated 11 September 2025. Because imported digital supplies and low-value goods can be affected by detailed exceptions, check the current page and activity-statement instructions for the period you are filing.
Singapore: reverse charge for businesses without full input-tax recovery
Who is generally within scope
IRAS states that, from 1 January 2020, GST-registered businesses that are not entitled to full input-tax credit because they make exempt supplies or receive non-business receipts must account for GST on imported services. Services specifically excluded from the reverse-charge scope are outside that rule. The business must therefore test both the nature of the service and its input-tax recovery profile.
A business that is not GST-registered should consider the annual value of imported services and low-value goods when assessing whether it must register. IRAS gives a threshold of S$1 million over a 12-month period. That threshold is a registration test, not an automatic statement that every business below it owes reverse-charge GST.
Singapore return boxes
For a return in which reverse charge is required, IRAS instructs the taxpayer to:
- indicate “Yes” in box 14;
- state in box 14 the value of imported services, and where applicable low-value goods, subject to GST; and
- include the same value in box 1, total standard-rated supplies.
The reverse-charge output tax is calculated under Singapore’s current GST rules. An eligible input-tax claim remains subject to the normal recovery rules, so exempt or non-business use can leave a net amount payable.
Supplier-payment condition and adjustments
IRAS return guidance describes a 12-month supplier-payment condition. Depending on the circumstances, failing that condition can require repayment of claimed input tax or allow an adjustment. Check the complete current IRAS conditions before making an adjustment; the existence of the condition does not by itself determine the amount for every transaction.
Singapore filing sequence
- Classify the imported service and check that it is not excluded.
- Confirm that the business is GST-registered and is not entitled to full input-tax credit because of exempt supplies or non-business receipts, or assess whether registration is required using the S$1 million 12-month test.
- Calculate the GST on the imported value using the current Singapore rate, tax point and currency rules.
- Mark “Yes” in box 14, report the imported value there, and report the same value in box 1.
- Claim input tax only to the extent allowed, taking account of normal recovery rules and any supplier-payment adjustment.
- Submit the GST return and pay the net amount through IRAS’s current filing and payment process.
United Kingdom comparison: the mechanism is VAT, not GST
Return entries for qualifying imported services
HM Revenue & Customs describes reverse charge for qualifying services received from abroad by a UK business. Calculate output VAT on the full value and enter it in box 1. Enter a matching amount in box 4 only to the extent the business is entitled to reclaim it. Enter the full supply value in boxes 6 and 7.
| UK VAT return box | What to report |
|---|---|
| Box 1 | Output VAT calculated on the full value of the qualifying imported service |
| Box 4 | Recoverable input VAT, limited by the normal deduction rules |
| Box 6 | Full value of the supply |
| Box 7 | Full value of the supply |
Convert foreign-currency amounts into sterling. For a business entitled to full recovery, output and input VAT often offset. Partial exemption or another restriction can leave VAT payable. HMRC’s cited page was last updated 31 December 2020, so confirm the current guidance and return instructions before relying on these entries.
How output tax and input tax interact
Reverse charge creates an output-tax calculation first. The recipient is accounting for tax that the overseas supplier did not charge. A possible input-tax claim is a second, independent step. It depends on ordinary requirements such as taxable business use, partial-exemption rules, registration and any local evidence or timing conditions.
| Question | Why it matters |
|---|---|
| Is the imported item within the reverse-charge scope? | If not, there is no reverse-charge entry under that rule, even if the supplier is overseas. |
| What value and rate apply? | These determine the output-tax amount reported to the authority. |
| Is the purchase used for taxable activity? | Use affects eligibility for input-tax recovery and, in New Zealand, whether the below-95% condition is met. |
| Is the business partly exempt or receiving non-business income? | Recovery may be restricted, leaving a net payment despite the reverse-charge offset. |
| Has the supplier been paid within a required period? | In Singapore, the 12-month condition can affect a claimed input-tax amount. |
Never net the two amounts informally on the invoice or omit the output side because the expected input claim is equal. The return must show the fields required by the local authority, and the deduction must be supportable under that authority’s rules.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Records to keep for every imported-service reverse charge
Retention requirements differ by country, but a defensible file normally includes:
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- the supplier’s legal name, address and country;
- the original invoice, contract or order and a plain-language description of the service;
- invoice date, tax point or service period, payment date and original currency;
- the exchange-rate source and calculation used where conversion is required;
- the jurisdiction and registration-status analysis showing why reverse charge applies or does not apply;
- the taxable, exempt, private or non-business use calculation, including the New Zealand percentage test where relevant;
- the output-tax calculation and any input-tax recovery calculation;
- the completed return or activity-statement fields and payment confirmation; and
- evidence for any correction, partial-exemption adjustment or repayment triggered by a local condition.
Accounting software can help track foreign-currency invoices and recurring return entries, but software does not decide whether a service is legally in scope. Verify country support, tax-code configuration and the current authority rules before relying on an automated posting.
Common mistakes and how to correct them
Using the supplier’s foreign invoice as proof that no tax is due
An invoice without local GST or VAT may be exactly what reverse charge expects. It does not prove that the recipient has no obligation. Re-run the local scope test and calculate the tax in the recipient’s return.
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Applying another country’s rate or return box
The 15% figure belongs to the New Zealand guidance cited above. Singapore’s box 14 and box 1 instructions do not become Australian or UK instructions. Use the current form for the country and period being filed.
Claiming the input tax automatically
A reverse-charge output entry does not guarantee full recovery. Exempt supplies, non-business receipts, partial exemption and other restrictions can leave tax payable. Calculate the permitted deduction separately.
Ignoring digital products or low-value goods covered by local rules
Australia’s overview expressly includes digital products and low-value imported goods. Singapore’s registration discussion also refers to low-value goods. Check the local definitions and exclusions rather than treating every overseas purchase as an ordinary service.
Failing to preserve the use calculation
Where liability depends on use, keep the method and assumptions used at the time of filing. A later explanation without the underlying invoice, allocation and working paper is harder to defend.
Relying on an old return guide
Rates, exclusions, boxes and electronic filing instructions change. Confirm the current authority page and form immediately before filing, particularly for the UK VAT page last updated in 2020 and for any Australian or Singapore transaction involving digital supplies.
A final pre-filing checklist
- Country of recipient and tax registration status confirmed.
- Overseas supplier, service type and place-of-supply facts documented.
- Local exclusions and taxable, exempt or non-business use tested.
- Tax point, taxable value, rate and currency conversion verified from the current authority guidance.
- Output tax calculated before any input-tax deduction.
- Input-tax claim limited to the amount normally recoverable.
- Correct return boxes or activity-statement fields selected.
- Payment amount and filing deadline checked on the authority’s current instructions.
- Invoice, calculations, use allocation, return and payment evidence retained.
If the country is not New Zealand, Australia, Singapore or the United Kingdom, do not transplant one of these examples. Use the recipient country’s primary tax authority and verify its current reverse-charge scope, rate, registration threshold, return fields, currency rule and payment process.
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