December 14, 2010, 4:09 PM — New Zealand has joined the ranks of an increasing number of governments that have issued warnings for businesses thinking about cloud computing.
The N.Z. Inland Revenue Department, which is responsible for taxation, issued an alert earlier this week reminding businesses that by law, they must keep their tax records in the country. With cloud computing, however, the data might be stored just about anywhere on the planet.
There's no issue with keeping backups of records overseas, the alert continued; yet the law says primary copies of accounts need to be kept in New Zealand, seemingly so they're instantly accessible to tax inspectors.
This should mean there's no problem with businesses using backup services such as Mozy, which store data in the cloud. However, there potentially would be a problem with a business relying solely on a service such as Google Docs. Depending on what's included in the definition of accountancy data, software-as-a-service (SaaS) outfits such as Salesforce.com might also be ruled out.
In reality cloud providers utilize data centers as close as possible to their clients, although larger countries fare better than smaller ones. In the United States there are various data centers across the country, for example, although for many European states the data center lies beyond national boundaries.
European users of Amazon Simple Storage Service (S3) will find their data is stored in Ireland. Those in the Asia Pacific area will find their data stored in Singapore. New Zealand users of S3 will probably find their data stored in Singapore too.
The New Zealand warning follows one by the Australian Prudential Regulation Authority in November, warning that the rush to the cloud is "not being subjected to the usual rigor of existing outsourcing and risk management framework". The Irish Department of Finance issued a similar warning in February.