There are 2 big issues that businesses are facing, the implementation of accounting systems and the management of cash flow.

Overall, many businesses have not had experience with filing and paying taxes. The greater challenge is to ensure they are able to handle compliance and conform to the tax norms. Tax compliance is now a priority for all businesses with the introduction of VAT. Prior to compliance though, it is necessary to maintain clear financial reporting. Owing to the lack of taxation in the region, SMEs do not have a clear idea of financial reporting. Currently, this is changing due to growing awareness of financial reporting systems and the advent of technology as a strong tool for financial reporting.

Secondly, cash flow management translates as the cycle of having to pay taxes and receive tax returns from the central government. This process is putting pressure on every single business that is already experiencing a cash shortage. Taxes are paid as soon as any good or service is purchased from outside the company. The cash will eventually return as a reimbursement on a regular basis.

This means that even though the extra burden will lastly be paid by the customer, businesses will have to make more cash available to fill the payment needs while the central government makes the reimbursement. Having cash available instead of receivables will add to the overall costs of working capital.