Exploring

Understanding the intricacies of the rules and amending your systems to comply with the legislative requirements can be quite a challenge, particularly in context of the environment of the Middle East region, where many businesses have had no previous experience with reporting and paying taxes. There is a need to understand the complexity when dealing with taxes while exporting & importing goods and services between other GCC countries and the rest of the world.

The introduction of VAT will change all aspects of doing business in, through and with UAE based companies. As a growing trading hub, the impact of eventual distortions will have to be recognized by businesses proactively.

It will not be enough just to hire accountants with VAT experience and buy software packages that cater for VAT filings. Many accountants are not familiar with the specific regulations requirements within the GCC. Many managers are also not fully aware of the cash flow pressure that VAT will generate, in addition to the new access from government to information on transactions and compliance risks.

Value Added Tax is one of the most simplest indirect methods of taxation. The complexity arises when certain industries are preferentially rated or exempt from taxation. This leads to ambiguities and the finer details must be kept in mind during compliance measures. Policies must be structured to maintain strict compliance as the financial penalties when exposed to risk are extremely heavy.

Furthermore, there must be a review of the process and technical aspects of the law as and when the tax legislation is updated.