UAE to implement VAT on 1 January 2018
The UAE Minister of State for Financial Affairs, His Excellency Obaid Humaid Al Tayer, has stated that the UAE will implement VAT on 1 January 2018. VAT is expected to be introduced for all the products and services with some limited exceptions including basic food items, healthcare and education. The UAE are planning to implement on 1 January 2018, the other GCC countries may do so at the same time or by 1 January 2019 at the latest.
While the upcoming VAT law will bring considerable economic contribution into the economy of the Gulf Cooperation Council (GCC) region, there will be not only significant complexity of implementing a new tax system as it has never been tried in the GCC region but also new accountability added to the companies to ensure the tax accurate calculation and proper tax records retention.
Ultimate Importance of VAT Introduction
As this VAT implementation will have immediate effects on consumer behaviour which gives opportunities for companies to assess their business direction and to plan strategically. The successful deployment will have the direct impact on the growth and KPIs of the companies.
Implications on IT Support of Companies
While it is 100% assurance that new VAT law will affect virtually all functions within a business, including information technology, human resources, procurement, finance and marketing, the implication on IT support will have its irreversible and most profound impact.
Businesses and merchants will need to incorporate VAT into their existing accounting systems and will need to establish new processes to keep accurate records to demonstrate to the tax authority that they have correctly applied the VAT rules.
IT systems will form an important part of this process as in any organisations, a fully automated tax engine will be a necessity.
- Business with existing ERP will have to add VAT module to it.
- Business without any ERP system but with accounting processes who anticipate low growth will have to add VAT process to it.
- Business without any ERP system but with accounting processes who anticipate steady and rapid growth will have to consider implementing ERP at the same time and along with VAT introduction to ensure the cost effectiveness.
Cloud Based VAT IT Services
The solution will be offered as Cloud solution on pay-as-you-go scheme which will mean minimum or no upfront investment and very economical monthly expenditure for maintenance and support.