Tax law changes for cloud storage proposed

A major obstacle to overseas cloud computing could be removed as the Inland Revenue Department is working towards developing guidelines for offshore cloud service users.

The move comes as Google homes in on the New Zealand cloud market by making its application suite available through a spearheading channel partner, Cloud Sherpas.

The move could potentially open up a whole new market if New Zealand tax laws requiring businesses to keep records in the country are removed.

Cloud Sherpas bought the Wellington-based Google Apps reseller, Wave Adept last year and has recently raised US $20m to boost its efforts in the Asia Pacific region.

Cloud Sherpas merged last year with Global One which is a Salesforce.com partner and will be offering Salesforce's CRM services as well as the Google Apps suite and Amazon Web Services.

An Inland Revenue Department spokesperson says, “Inland Revenue is working to develop guidelines for those who use offshore cloud services, although it would seem that most businesses continue to keep their records in New Zealand, and those using the cloud do so as a back-up service.”

It appears that IRD will allow a company to apply to have its data stored overseas but it is unclear as yet whether any exemptions have been granted.

IRD says, “Each application will be considered on individual merits, having regard to the taxpayer's compliance history and whether storing business records offshore is likely to impede Inland Revenue compliance activities.

“The Commissioner has the discretion to permit a taxpayer to keep their records outside New Zealand. However, those wishing to do so must write to Inland Revenue and explain the reasons why and show that those records can be returned to New Zealand intact, without unreasonable delay, and at no cost to Inland Revenue.”

John Orrock, senior vice-president for Asia-Pacific of Cloud Sherpas says, “In the outset the Cloud Sherpas portfolio will be the Google and Salesforce.com cloud solutions. That said Cloud Sherpas has plans to expand this portfolio to Workday and Amazon Webservices (AWS) these will each form a new division in the organisation. We will also be focused on specific verticals and horizontal practices such as Mobility, Architecture, Social/Collaboration.”

However, he is tight lipped about where any data would be stored. “Cloud Sherpas is a cloud solution provider, but we are not the vendor, [such as] Google or Salesforce.com. Therefore we cannot comment about the location of their datacentres.”

Meanwhile the advent of HTML5 is making the possibility of localised saving from cloud apps possible.

Orrick says Cloud Sherpas will be targetting all sizes of business, however most web cloud commentators agree that Google Apps is best suited to small businesses or very large departments. One of the main competing products is the Microsoft combination of 2010 and Lync.