- VAT is set to truly be taxing
Diversification, changing operating models and promoting smart initiatives led by technology and employment continue to be key trends as we move into Q1 2017. In order to promote diversification, governments across the region have introduced various initiatives to reduce the dependency on oil generated incomes and further stabilize the economy.
As part of the stabilisation strategy, we have witnessed a number of regulatory changes, with the recent one being the introduction of the new bankruptcy law in the UAE. The new law will further promote foreign direct investment as it gives investors greater clarity over the potential downside of VAT, with the next 13 months being crucialstment and protects jobs, gives certainty and works to maximises creditor returns.
We have also been privy to one of the largest fiscal reforms which the region is currently undergoing. This reform will see VAT being implemented from 1 January 2018, by way of generating a new source of income. In order to do so successfully and create a tax system which works, the need for businesses to invest time and effort in preparing their processes, structures, systems and people will only increase.
Grant Thornton in the UAE said “there is a common myth that VAT implementation has an impact for the finance function of a business only, in fact the readiness and implementation of VAT will require a paradigm shift in the manner in which businesses operate and manage their processes. The seismic change will have a ripple effect on every function and person across the business”.
Following the model of countries who have recently implemented VAT, which include Singapore and Malaysia, a minimum of 12 months are required in order to prepare systems, processes and people in order to be fully prepared and ready to manage VAT. With less than 13 months remaining before the impending introduction of VAT in the UAE, businesses are urged to replace complacency with an active commitment to prepare for the significant change required in order to be ahead of the curve.
Hisham Farouk, CEO of Grant Thornton states “The Ministry of Finance (MoF) are releasing regular updates, with another being expected very soon – having such speciality in our team allows Grant Thornton to truly enable our clients to manage this fiscal reform prior to the implementation date. From technological amendments to finance function remodelling, the time for change is now”