Family-run businesses face significant challenges and need to assess their strategy carefully in light of the impending introduction of value added tax (VAT) in the UAE, said professional services firm EY.

The increased compliance requirements mean that family-run businesses would need to decide which department would be responsible for VAT and related compliance. It may be the right moment to assess the duties and responsibilities of a family office in this regard, if already in place, or assess the feasibility of the set-up of a family office as part of the family’s wealth strategy, added EY.

EY and Thomson Reuters have partnered to discuss the impact of VAT on family-run businesses, the various opportunities and challenges that businesses may face, and how best to tackle these obstacles to be prepared for VAT implementation.

David Stevens, GCC VAT Implementation Partner, EY said: “To ensure VAT readiness, family-run businesses in the GCC need to conduct a comprehensive VAT impact assessment of the operations, goods and service flows, identifying and segregating business and family related expenses, and defining the scope of the required VAT and organizational structure and resources (e.g. family office etc.).

“It is vital for family businesses operating in the GCC to raise awareness across the entire organization, educating all employees about the implications of VAT and potential penalties in the case of non-compliance.”

 Ismael Hajjar, Mena Private Client Services leader, EY said: “This is an ideal time for GCC family businesses to reconsider their approach to ownership structures and family governance along with conducting VAT assessment analyses.

“In fact, reviewing the legal structures and considering efficient tools to streamline the family wealth with business investments are important prerequisites for a successful VAT implementation. Ignoring such measures may result in significant costs and inefficiencies.” – TradeArabia News Service