Wednesday 21 March 2018

KPMG helps Saudi companies reduce impact of tax errors

RIYADH, February 18, 2018

KPMG, a leading accounting and consulting firm in Saudi Arabia, has identified clear cases where VAT registered businesses in the Saudi market could make a mistake in their VAT filing due to lack of accuracy of invoices or clarity of records and gaps in tax data.

However, the impact of this type of error can be reduced by ensuring the tax and accounting controls and processes are set up to identify and correct mistakes.

Nicholas Soverall, head of VAT at KPMG in Saudi Arabia, explained that high fines would encourage taxpayers to improve their accounting systems to manage value-added tax, noting that the businesses may also benefit from the need to transform their systems and processes for VAT. This could lead to a gradual improvement in processes by targeting all aspects of the business. He saw this as a positive trend for companies.

In a series of three workshops organised by KPMG over the last week in Riyadh and Jeddah, Alkhobar, titled "VAT - A Clearer Perspective ", he stressed the importance of the taxpayer being transparent, enhancing the disclosure culture, and working hard to manage its tax risk - thereby enabling businesses and institutions to maintain profitability and future investment.

The workshops, which were attended by accountants and financial experts from several sectors, presented many views on value added tax and the readiness of the tax administrators to meet the challenges of the managing the new tax including processing the large volume of returns, responding to the numerous tax queries, and looking after the taxpayers’ accounts.

The head of VAT at KPMG in Saudi Arabia highlighted the key features of the application of value-added tax, using several practical examples to encourage taxpayers to analyse their transactions in sufficient detail to ensure that VAT is applied correctly and, where there is doubt, seek support and clarification.

Nicholas Soverall, complimented the efforts made by the General Authority of Zakat and Tax in the kingdom to prepare taxpayers and consumers for the introduction of the tax. However, this was only the beginning and there was a long way to go before all the tax, accounting and systems issues that have arisen, can be resolved.

During the workshop it was explained that the application of value-added tax in the kingdom should not have a prolonged effect on the purchasing power of consumers. He noted that, in particular, the health care, education and housing sectors enjoyed some relief from the tax. He pointed out that the purchasing power of the consumer will be more affected by power and fuel costs because of the impact on all parts of the economy. Similarly, the exchange rates differences between the Riyal and the currencies of the kingdom’s main trading partners could impact negatively the costs of imported of goods and impact purchasing power.

He clarified that the percentage of value added tax in Saudi Arabia is low compared to international rates, pointing out that a higher rate of tax would lead to a higher value of penalties which could have a significant impact on business. "It is important to help business manage the financial and administrative challenges associated with the tax," he said.

Tags: Saudi | KPMG | Workshop | tax | VAT | Arabia | error |

More Finance & Capital Market Stories

calendarCalendar of Events