Nearly half of businesses polled in the Gulf Cooperation Council (GCC) nations—the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait—are unprepared for the implementation of value-added tax (VAT) on Jan. 1, 2018, according to a new survey by the Association of Chartered Certified Accountants (ACCA) and Thomson Reuters.
Of the more than 330 people from a variety of industries in the region who participated in the survey, 11% said they understand the impact VAT implementation will have on their businesses and have used this knowledge to draft a policy, consider compliance models and identify IT system gaps, the survey noted.
Further complicating the matter, aside from Saudi Arabia, each GCC member state has yet to issue its own VAT law and executive regulation that can potentially lead to different tax treatment between each country, said Pierre Arman, market development lead for tax and accounting at Thomson Reuters. “Every function will be impacted by VAT (it’s not just a finance issue) and therefore it is essential for organizations in the region to begin analyzing how VAT will impact their operations through careful planning with their chosen tax adviser,” he said. “Time is limited and a considerable amount of the VAT impact assessment analysis can be done without knowing the details of the final law, as most of the VAT treatment can be extrapolated from other jurisdictions around the world.”
The ACCA and Thomson Reuters included a few pointers for businesses to ensure they’re ready for the VAT:
- Allocate a budget for VAT.
- Seek out a tax advisor.
- Identify potential IT system gaps for VAT implementation. Specifically, when reviewing your existing billing system, identify what VAT compliance data is available and what’s not available for VAT calculation and reporting.
- Evaluate the VAT reporting model you’d like to apply and prepare for the appropriate operational decisions and their consequences.
– Nicholas Stern, senior editor