The UAE has reaffirmed its commitment to the implementation of a value added tax (VAT) in the country with the Federal National Council (FNC) approving the draft law last week and the final law is waiting for the presidential approval.
With the imminent VAT implementation, tax practitioners, technology leaders and government departments are calling on businesses to prepare themselves for the new tax regime in the country.
“Introduction of VAT is new to the UAE and the GCC states. It is important for companies to make preparations in terms of gearing up the accounting systems to integrate VAT. With just about 9 months to go for actual implementation, it is imperative for companies to address the VAT related concerns,” said Aarti Mohan, ERP & EPP Business Development & Strategy Leader, Oracle.
In preparation for the GCC-wide implementation of VAT, each member state of the GCC will establish their own separate national legislation on VAT and as such the detailed compliance requirements and set of rules will be outlined in each respective legislation.
Experts warn that it may not be a wise idea for companies to wait for the final legislation on VAT to prepare themselves for implementation. “Although VAT is new in the GCC, it has been implemented across a number of countries in the world. What companies need to do on an urgent basis is to prepare their accounting systems to integrate VAT in it,” said Si-Mohammad Said, regional head of marketing, application at Oracle
In preparation for integrating VAT, companies will require to assess the capabilities of existing IT systems and re-configure it in order to generate VAT compliant outputs. In many cases, significant changes will be required to IT platforms and present workflows and processes.
Modify systems
Companies that have enterprise resource planning (ERP) solutions, it is mostly re-configuring the system to introduce VAT into the software. With a number of companies, using different types of software solutions and accounting packages, it will be important to check and test the system capabilities much ahead of the deadlines.
As part of the preparations, businesses will need to modify their systems to incorporate VAT right from their point of sale terminals, invoice and accounting systems, information technology systems and management reporting systems.
“Modifications to ERP solutions and accounting systems to incorporate VAT can be done even without the full details of the VAT law. With the deadline fast approaching companies need to speed up preparations,” added Said.
A recent study by EY [formerly Ernst & Young] based on a GCC-wide survey showed that more than half of companies in the GCC have not started any preparations for the implementation of value added tax (VAT). Participants at a recent EY webcasts on GCC VAT, 50 per cent of the businesses surveyed reported that they have not started any preparations. With less than 10 months to go before the GCC VAT is implemented, 51 per cent of businesses reported that VAT compliance will be their main area of focus, while just 8 per cent of respondents said they would be concerned about procurement considerations, and 10 per cent reported they will look to address customer and vendor pricing as a priority.
Education and training
From the survey respondents only 13 per cent of businesses responded that they considered education and training of primary importance during VAT preparations.
“Global experience has shown that VAT training and education is fundamental to ensure successful VAT implementation. Business focus should be primarily on system and business process readiness, communication, staff training, and sourcing VAT knowledge internally or externally. Compliance with the requirements of the VAT law will follow if these areas are properly addressed,” said David Stevens, EY’s VAT Implementation Leader.
Business systems, from fully integrated ERP systems to stand-alone finance packages will often include standard VAT functionality. However, this is likely to require modification to capture specific GCC regulations. For larger organisations, configuring VAT in their ERP and finance systems will be resource intensive, potentially complex and expensive.
While getting ready within a tight schedule experts expect financial advisers, system specialists and solution providers are also likely to face resource issues, while attempting to support their customer base across the GCC region.
“It is true that incorporating VAT will have an impact the entire business systems, but as part of getting ready for the introduction, it is possible for companies to simulate a fully functional VAT environment without causing interruptions to current business requirements. We think companies should start testing and simulating VAT implementation,” said Mohan
source : gulfnews
GMT 23:32 2017 Thursday ,13 April
Breathing space for Oman and other GCC states over VAT deadline?GMT 02:30 2017 Monday ,20 March
What needs to be done to prepare your firm for VATMaintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©
Send your comments
Your comment as a visitor