Although the introduction of value added tax (VAT) in the GCC in 2018 may seem like a long way off, there are sensible ways businesses can start preparing now – by assessing how it will impact them, according to experts.

Experts also highlighted the importance of undertaking a capability assessment of the existing systems to manage VAT at a recent workshop in Doha, Qatar organised by PwC, a leader in assurance, advisory and tax services.

This latest PwC tax workshop outlined the VAT impact on businesses and how identifying a VAT strategy for implementation and identifying contracts that require VAT action are all vital steps to preparing for the introduction of the VAT.

Jeanine Daou, PwC Middle East partner and Indirect Taxes and Fiscal Policy leader said: “An understandable question we often receive is ‘what steps should be undertaken now, when the legislation is yet to be issued?’”

“Three good areas to focus on are 1) Modelling what could be the business impacts, 2) Understanding the IT systems and business processes that will be affected by VAT as part of shaping the VAT implementation project and 3) Review existing contracts that do not accommodate the introduction of a new tax. On the latter point, companies may be forced to absorb the impact of VAT if the contracts are not amended,” Daou added.

Wadih AbouNasr, Qatar’s country senior partner said: “PwC’s recent ‘Managing Tax’ publication highlights the importance of investing in technology to help manage the additional workload that VAT will introduce.  The clients we surveyed and spoke to recognise that making the required systems changes for VAT will be a major challenge. They also see that putting in place appropriate controls and tax knowledge to manage VAT technical issues will also be challenging.”

“It can be easy to underestimate the amount of time and resources that will be required to implement VAT effectively. There will be great demands placed on finance and tax departments given the volume of data and number of transactions that will be covered. Ensuring that systems are installed to help manage this will save both time and money, and improve accuracy and efficiency,” Wadih added.

The workshop speakers concluded by stressing the importance for businesses to assess the VAT impact at an early stage to guarantee that resources and skilled people are in place to deal with the impact and while there is no legislation published yet, preliminary discussion and preparation can be based on experience of how standard VAT systems work across the globe and the issues to consider in order to be VAT compliant. – TradeArabia News Service