With a new Value Added Tax (VAT) system expected to be introduced in the Gulf Cooperation Council (GCC) countries beginning January 1, 2018, businesses need to start planning and preparing to comply with the new tax regime.
The GCC countries include Saudi Arabia, Bahrain, Oman, Qatar, Kuwait, and the United Arab Emirates.
Sovos Compliance was in Dubai, UAE on August 30 and 31, sponsoring and attending the GCC VAT Forum, hosted by the International Quality and Productivity Center (IQPC). The forum attracted a mix of tax industry professionals, including the Sovos team and attendees from the Gulf region business community.
Multiple sessions over the two days were geared toward providing a general framework on how VAT operates, including:
- Steps businesses need to take now to start getting ready
- How to staff a team to manage VAT compliance
- Discussions on managing compliance both administratively and with automated systems
As the Gulf region has not had a VAT or similar indirect tax system in place previously, the attendees were looking to acquire an understanding of how a VAT system operates, as well as information on best practices in managing the roll out and the ongoing compliance once the tax regime is established.
To date very little information has been released by the governments on specifics of the new tax system, though there is an expectation that more detailed information will be released in October. There is concern that with January 1, 2018, quickly approaching there won’t be enough time for the business community to implement the new regime within their financial systems. Timing and efforts to comply were a large part of the discussions occurring outside the formal sessions.
The three main points we took away from the event are:
- Businesses are gearing up to implement new systems, but with little information as to specifics, so they are looking at other VAT systems for guidance on how to begin analyzing their businesses.
- Many businesses and tax industry professionals are concerned that the January 1, 2018, implementation date will force both business and governments to rush to implement the new systems in a short amount of time.
- There is a great need for VAT information and training for the business community that has not had to manage such a system before in these countries.
There is concern that with VAT expected to be introduced in the GCC on January 1, 2018, there won’t be enough time for the business community to implement the new regime within their financial systems.
Sovos suggests businesses that will be affected by this new tax system should be reviewing their accounting and financial systems to understand what information and data they currently use and have available. Then, using other VAT systems as a guide, ensure they have access to important data elements such as sufficient detailed product/service categories, location information, and price details.
This event was just the beginning of providing information and education regarding this new tax regime.
Sovos Compliance will keep the tax and business communities up to date as the new rules are released and evolve over time.