Value added tax (VAT) is not just an accounting or tax challenge but it also impacts every part of the business with regard to cash flow, costing of capital, pricing of products and services, financial reporting, tax accounting and compliance processes.
WHY IS VAT BEING CONSIDERED BY THE GCC?
VAT is seen as an effective tool in raising revenue to achieve government objectives whilst preserving the neutrality for businesses. If designed and operated correctly and efficiently it can provide significant revenues with limited administrative costs and impact on business. There will be significant training needs for personnel to understand and operate effectively under a VAT regime. The implementation of VAT will require proactive and timely preparation. Companies will need to start by understanding key areas of impact to their business model, and preparing different scenarios for the design and application of VAT. The implementation of changes will have to be managed through robust program management across various company stakeholders in the entire value chain. The implementation will be challenging for many businesses, particularly as companies in the GCC region have not encountered a complex tax regime spanning the complete value chain in the past.
IMPORTANT RESOURCES :
Ministry of Finance - United Arab Emirates