Experts tell businesses to get ready for VAT
10 Jan 2017 - 21:04
With the implementation of Value Added Tax (VAT) throughout the GCC starting January 1, 2018, it is time for the companies to start looking in detail at the potential impacts it will have on businesses from all fronts including organizational, operational, commercial or financial perspectives.
“With only a year to go to the planned date of implementation of VAT, businesses operating in GCC countries need to urgently start focusing on getting ready. Our experience, in the recent implementation of VAT in Malaysia, is that the area with the longest lead time is technology, and so businesses would be well advised to commence planning any major system changes in the next few months”, Justin Whitehouse, (pictured) Deloitte Middle East VAT leader said yesterday.
“Businesses must therefore ensure relevant employees have the appropriate skills and knowledge for their roles, through appropriate training and recruitment”, he said.
One of the main concerns surrounding VAT is in its application to the property development and construction industry. This is because the range of transactions underpinning the planning, construction and sale of commercial or residential real estate is varied and often highly complex which creates the need for an extensive suite of bespoke VAT rules to cope with these challenges.
The development and construction sector is of huge importance to the GCC as a whole but the scale of many businesses operating in the sector, and the cost and revenue throughput that they manage, by nature create an environment of risk associated with poorly understood or managed VAT obligations.
'The construction and real estate sectors are complex from a VAT perspective and this carries significant VAT risks especially in respect of long term contracts and therefore businesses are well advised to consider the impact of VAT as soon as possible' said Nurena Tarafder, Deloitte Middle East real estate and construction industry VAT leader.
Commercial risks are the most significant of the challenges listed in the paper that need to be addressed including lead times on major projects and Registration of subcontractors. There are many very distinct functions that are loosely categorized as part of the tourism industry, including airlines,