VAT reverse charge

VAT reverse charge is an anti-fraud measure which applies to the sale and purchase of specific goods and services. These are typically high value, portable, electronics such as mobile phones. The reverse charge procedure holds the purchaser liable to account for the VAT on the sale.

VAT is not charged by the vendor. The invoice must show the value of VAT due under the reverse charge rules. It must state that the reverse charge applies, and that the trading account customer is required to account for the VAT.

New Zealand specifics

Compulsory Reverse Charge applies on the following circumstances:

  • Sale of service is made by a non-resident to a resident citizen
  • Sale is taxable if made in New Zealand
  • Buyer must be a registered tax payer
  • Estimated percentage of the taxable supply at the time of acquisition is less than ninety five percent
  • Percentage of the actual taxable supply is less than ninety five percent.

Reverse charge is 15% of the consideration for the supply.

How Infor meets this requirement

Ensure that the VAT reverse charge is enabled. See the Financials Setup and Administration Guide.

To create a Payables invoice record for VAT reverse, see the Payables User Guide.