When to Charge GST (And When You Don't Have To)

Your state of mind before a sale should not be "do I add tax to this one?" — and yet for most online sellers crossing borders for the first time, it is.

The good news is that knowing when to charge GST is never a judgement call. It comes down to three checks, in order, and once you know them the decision takes seconds.

For decades, many remote sellers assumed that paying taxes at home was the end of the story. That is no longer how it works. As a supplier of digital goods and services, you can be responsible for charging, collecting, reporting and submitting GST to the governments where your customers live — which means several countries, each with its own rate.

This guide walks the decision. If you first need to know which countries are involved and what they charge, start with what GST is and which countries have it.

Who Has to Charge GST?

Any business selling goods and services into a GST country, once it passes that country's registration threshold. Being based somewhere else does not exempt you.

That surprises people, so it is worth understanding the reasoning. Governments want the tax on everything their residents consume, including what arrives from abroad. Physical products get taxed at customs. Digital products cross no border and pass through no customs hall, so the obligation has to be written into law instead.

There is a competitive logic too. If foreign sellers could skip the tax, domestic businesses would be permanently undercut in their own market — their products would cost 10% or 15% more for no reason the customer can see. Buyers would shop abroad, local firms would sell less, and the government would collect less tax from both sides. Extending GST to overseas sellers levels the field and protects the revenue base.

Thanks to recent modernization, you can generally handle all of this yourself, without appointing a local tax representative.

When Does the Obligation Start?

At the registration threshold: a fixed amount of local-currency sales that, once passed, requires you to register and start charging.

Thresholds are measured over a rolling twelve-month period — either what you have sold in the last twelve months, or what you reasonably expect to sell in the next twelve. That second half catches people out. You do not always get to wait until the money has landed; a credible projection can trigger the obligation early.

Here is the number you are watching in each country:

• Australia — AUD 75,000
• Canada — CAD 30,000
• India — no threshold at all
• Maldives — MVR 1 million
• New Zealand — NZD 60,000
• Papua New Guinea — PGK 250,000
• Singapore — SGD 1 million

India deserves a second look. Because there is no threshold, a single small sale to an Indian customer means you are required to register and comply. There is no quiet period in which a handful of sales go unnoticed.

Our VAT and GST threshold tracker monitors these numbers against your actual sales, which matters most for the projection half of the rule.

Once you pass a threshold, or predict that you will, register through the country's tax authority. Most now offer a simplified online registration built specifically for overseas businesses, which is considerably lighter than the traditional route: find the GST section of the revenue authority's website, look for the pages on digital goods or remote sellers, create an account and receive your GST number. Our Australia, Canada and New Zealand guides walk the specifics.

Do You Charge This Particular Customer?

You are registered and past the threshold. Now every sale needs two facts established: who the customer is, and where they are. The first decides whether you add tax at all. The second decides how much.

Who they are: business or consumer

Request the buyer's GST number at checkout. Businesses have one; private individuals do not.

If they have no GST number, you charge tax. This is an ordinary B2C sale. Add GST at the local rate, issue a compliant invoice, and report it on your return.

If they have a valid GST number, you do not charge tax. Your customer is a fellow business, and the transaction falls under the reverse charge mechanism: the buyer accounts for the GST themselves. This exists for a practical reason. Registered businesses can reclaim the tax they pay on business inputs, so routing the money to you only for them to claim it back from the government wastes everyone's time. Better that they never pay it. Our explainer on how the reverse charge mechanism works covers the mechanics in full.

One caution: validate the number. Some buyers will offer a fabricated or expired tax ID to dodge the charge, and if you accept it at face value the shortfall is yours to cover. Most countries publish a free lookup — Canada has a GST/HST registry and Australia offers ABN Lookup.

Where they are: which rate applies

Location matters because some countries stack regional tax on top of national GST. In Canada, several provinces add their own layer to remote sales, so you may need the rules for British Columbia PST, Saskatchewan PST and Quebec QST as well as federal GST.

You also have to be able to prove where the customer was, because that is what justifies the rate you charged. Collect two of the following on every sale:

• Billing address
• Location of the customer's bank
• Country that issued the credit card
• IP address location of the buyer's device
• Country of the SIM card, for mobile purchases

Then store that evidence. If a tax authority asks, you will usually have weeks rather than months to produce it, and reconstructing location data after the fact is close to impossible. Cloud-based tax software collects and keeps it automatically, which is the difference between a request being an afternoon's work and being a serious problem.

How to Charge GST on an Invoice

A tax invoice carries more than a normal one. Each should contain:

• Your business name and address
• Your business GST number
• Invoice date
• Invoice sequencing number
• Buyer's name and address
• Buyer's GST number — and if you applied the reverse charge, the words "reverse charged"
• GST amount and rate applied to each item
• Final amount after tax
• The currency used

Keep every invoice. These are the records your GST return is built from, and the records an authority will ask for, so store them somewhere durable — cloud storage, or inside your tax software. When the deadline comes round, how to prepare a GST return picks up from here.

What Happens If You Don't Charge GST

The tax does not go away when you ignore it. It becomes yours.

If you should have charged GST and didn't, the government still expects the money — except now it comes out of your revenue rather than the customer's payment, because the sale is long gone and you cannot go back and add 10% to a completed order. Add years of back-tax across several countries, plus penalties and interest, and the bill is large enough to end a small business. If the shortfall looks deliberate rather than careless, you are in the territory of fraud rather than error.

There is a simpler argument too. If you are willing to sell to customers in a country, following its laws is part of the deal.

Getting the Decision Right Every Time

None of these three checks is difficult. They are just relentless: knowing when to charge GST means running them on every sale, in every country, through every rate change, forever. That is exactly the kind of work worth handing to software.

Quaderno makes the charge decision automatically on every transaction. It:

• Calculates the right amount of tax for each customer, right on your checkout page.
• Verifies the GST numbers your customers give you.
• Collects and stores the location evidence behind every sale.
• Creates and sends invoices in multiple languages and currencies, with the reverse charge applied where it belongs.
• Warns you when you are about to cross a threshold and need to register somewhere new.
• Tells you when rates or rules change, so the decision stays correct without you tracking it.

The same applies to EU VAT, US sales tax and everything else, so a business selling into several regions is not running separate processes for each.

Get the three checks right and when to charge GST stops being a question you ask on every sale.