The adoption of value added tax (VAT) by the GCC countries marks a major shift in tax policy, said an industry expert, adding that the VAT of 5 per cent is expected to produce revenues of over $25 billion per annum for the six countries.

This will allow them to amend the tax policy and other fees and charges and increase infrastructure investments, added David Stevens, VAT Implementation Leader with professional services firm EY.

Stevens’ extensive global experience in VAT combined with his substantial experience in both the private and public sectors will help businesses ensure that their business operations and systems are fully prepared ahead of the January 1, 2018 as a target date to go-live.

Sherif El-Kilany, Mena Tax Leader, EY, said: “The expected VAT laws are not ‘business as usual’ and may require several months for companies to successfully integrate a VAT functionality into their systems. It is a unique and transformative time for the region and we are keen to ensure that clients have access to the tools to derive VAT best practices tailored to their needs. Furthermore, we are delighted to welcome David as our new VAT Implementation Leader. David brings with him a wealth of international experience and knowledge of VAT implementation in complex environments.”

“While the introduction of a tax may seem daunting to consumers and businesses alike, the overall impact for consumers is less than the usual annual inflation rate,” said Stevens.

“As businesses prepare to implement VAT across numerous sectors, they will need to invest in analyzing, redesigning, developing and implementing updated systems, processes, contracts and business arrangements to match the requirements of the new tax system. I am very excited to be working with EY, as a leading tax practice in the region, during this time of economic progress.”

All GCC countries are working towards VAT implementation by January 1, 2018 to avoid transaction and sales issues that could arise from intra-GCC trade. Businesses that are not ready by the VAT go-live date may suffer fiscal consequences from the inability to pass on the underlying VAT to the end customer. All GCC countries are expected to have implemented VAT by the end of 2018.

“The priority for companies at the moment should be to secure the right accounting and IT talent that have previous VAT experience. As this is a new scheme, there is a limited pool of expertise that all GCC businesses are recruiting from. Additionally, the GCC ministries are building their tax administration systems almost from scratch and will require expansive teams to first develop the processes, and then monitor compliance after 1 January 2018,” Stevens concluded. – TradeArabia News Service