First of all, localize only affects how a date looks in the client and how the client interprets a date entered by a user, all through the web interface. So that setting does not come into play here.
I'm not 100% sure on this but I do believe that a web service date(time) without timezone information (even without a simple Z) should be interpreted as the server timezone, but it's been a while since I knew all of this on top of my head. If the other side wants the date to be interpreted as UTC, there should be a Z after it.
Also see http://www.w3schools.com/schema/schemadtypesdate.asp
Some more information on http://stackoverflow.com/questions/20670041/what-is-the-default-time-zone-for-an-xml-schema-datetime-if-not-specified