OK, so this isn't one of our usual blogs, but it could be the most valuable thing you'll read this week! VAT is coming to the UAE in January and there is absolutely nothing you can do to escape it- and yes, there are only three and a bit months to prepare! If you're confused by VAT in the UAE, then you're certainly not the only one. According to a recent article in The National up to 50% of businesses haven’t even started looking at whether their systems can cope with the new tax system – and many are burying their heads in the sand, risking exposure to penalties. Is yours one of them?
Fresh from the GCC VAT Forum at Dubai Marina this week, eWavelength Director, Rosie Seldon, outlines some practical tips that she picked up from the 2 day conference for getting VAT-ready, fast, and invites you to join her 100 Day VAT Challenge…are you in?
Don’t delay, start planning now
With less than 4 months to go until VAT is introduced in the UAE on January 1st 2018, many companies are only just starting to realise that their staff, IT systems, and invoicing processes need a radical overhaul to ensure that they can meet the legal requirements for VAT reporting.
"Everyone in the business will be touched by VAT’"
Unless you want to expose yourself to the risk of penalties, you need to start working out now how VAT will impact on your business. You also need a plan for onboarding your personnel, whether it’s the IT technician updating your electronic systems to record VAT on transactions, the accountancy clerk who has to identify recoverable VAT on purchases, or the HR team who have been charged VAT on their recruitment ads.
Consider outsourcing your VAT function
If you’re one of the lucky ones, you’ll already have a plan in place, and maybe you’ve already thought about how you’re going to train your staff to handle the complex task of identifying, recording, reclaiming and paying your VAT. If you already know that you lack the capability within your existing systems and staff to help you meet your legal obligations, now is the time to consider whether you need some help and advice from a taxation expert. With the best professionals in high demand, it’s important to act now before it’s too late.
Understand how the VAT rules apply to you
As a business leader, your teams will look to you for direction, and therefore it’s important for you to understand how the changes are going to apply to your business. KMPG Tax Director and VAT Leader Rob Dalla Costa outlined some essential steps to VAT readiness, which you may find useful as a starting point:
Find out if your business activities are taxable, zero-rated, or exempt. You may have different rules across the scope of your business.
Register your business for VAT. Carry out an assessment to determine if you need to register. If you’re a group of companies, you may register jointly or individually.
Review your cost base. Some costs will be exempt from VAT, some can be claimed back, and some cannot be recovered.
Review your IT and reporting systems Suppliers should provide you with a VAT receipt, without which you cannot claim back VAT. Your systems should be able to record VAT paid, and offset it against VAT owed.
Examine the impact on pricing. Use the information from your costing review to determine how your pricing structure will change to cover non-reclaimable taxes.
Evaluate your marketing strategy. How will your marketing message need to change to address your increasing costs?
Be prepared for changes and updates
With many aspects of the new VAT system yet to be clarified, it’s important for any business to make sure they can keep up to date with changes, which may happen quickly. For example, last year the Italian tax authorities gave companies just 48 hours to comply with changes in VAT regulations. Could your systems react quickly enough?
Join our 100 Day VAT Challenge – are you in?
Over the next 100 days, we’ll be challenging you to get VAT ready, and sharing useful articles, tips and advice for all companies preparing for the introduction of VAT. Our client AdvisorsME (www.advisorsme.com) is offering a cost effective service to any company needing help with VAT in the UAE or Saudi Arabia. If this is something that might be of interest, please get in touch at info@ewavelength.com. Follow us on Facebook or comment below and let us know how your Challenge is going! #100dayVATchallenge
eWavelength have successfully created and implemented marketing strategies and campaigns for companies across the globe. If you need any information about how we can help your business, please contact the eWavelength team on info@ewavelength.com.