DOHA: Businesses in GCC member states, including Qatar, should start planning in advance for the implementation of VAT (value added tax), which is expected to be implemented from January 2018, and should not wait until the last minute to avoid challenges, say experts from EY and PwC, two leading audit and consulting firms.
EY yesterday held a seminar on the implementation the proposed new tax policy (VAT) in Qatar.
The introduction of VAT represents a significant change in tax policy and will have a major impact on businesses across GCC. Although implementation is still more than 18 months away, businesses should already be thinking about how VAT will impact on their operational models.
EY in as statement said that VAT is expected to be implemented across the GCC in 2018. GCC Government officials have confirmed that the go live-date is January 1, 2018, and all GCC members should have VAT in place by the end of 2018.
The final form of the VAT is still being developed, but the general shape of the tax is already known.
Finbarr Sexton (pictured), MENA Indirect Tax Leader, EY, said: “The introduction of VAT on businesses will have a broad impact. It will diversify government revenue sources and reduce reliance on oil revenues to finance government expenditures. The timelines for businesses to build out the VAT capability is challenging. It requires careful planning and a structured programme to ensure that the business is VAT ready, including people, processes, controls and technology. Corporate structures and supply chains also need to be analysed in light of the new tax. This is to ensure that potential inefficiencies can be detected and addressed in a proactive manner.”
“If VAT is not applied correctly, it may become an additional cost to the business. Further, non-compliance with tax laws attract severe penalties. All businesses must undertake a review of their current contracts to determine if VAT has been appropriately addressed,” added Finbarr.
PwC also held a VAT workshop in Qatar, as part of a region wide initiative to update locally based businesses on the latest developments and the implications of VAT introduction in the region.
PwC also noted that the tax system will present a number of challenges for businesses and individuals operating in these States. Tax experts from PwC’s Qatar office and from across the region outlined that although 2018 may seem like a long way off, there are sensible ways businesses can start preparing now – by assessing how VAT will impact them.
The 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. Also summarised was the high importance of undertaking a capability assessment of the existing systems to manage 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”.The Peninsula
