KPMG helps firms for VAT implementation
The implications of introducing VAT in Oman and the ways in which businesses can prepare for the change were the main topics of the seminar attended by over 30 participants from a number of sectors.
MUSCAT: Companies in Oman can learn from the experience of Saudi Arabia and the United Arab Emirates (UAE) when they implement Value Added Tax (VAT) in January 2018 and thereby avoid potential pitfalls, according experts at a recent seminar organ- ised by the Entrepreneur’s Organisation of Oman in collaboration with KPMG.
The implications of introducing VAT in Oman and the ways in which businesses can prepare for the change were the main topics of the seminar attended by over 30 participants from a number of sectors.
While the VAT Law and specific regulations for implementation have already been released in Saudi Arabia, the UAE has published the Federal Decree—Law No. (8) on VAT with the detailed legisla- tion expected to follow shortly. These documents are based on a common Gulf Cooperation Council (GCC) framework, which will also form the basis for an upcoming VAT Law in Oman.
With the rollout of VAT in Oman due to be scheduled after implementation in Saudi Arabia and UAE, Omani companies would have the opportunity to fully understand the tax obligations and carefully prepare for VAT implementation well in advance.
Ashok Hariharan, Partner and Head of Tax at KPMG in the Lower Gulf, discussed in detail the challenges Omani companies are likely to face with the introduction of VAT and how they can start preparation right away.
“Many companies are waiting for the VAT Law to be published in Oman to start their preparations. In our opinion a large portion of the work can be carried out beforehand, which will help in the quick and smooth implementation of VAT when the time comes,” said Hariharan.
“To date, we have supported over 100 businesses in the UAE to get ready for VAT, and based on this experience, we can confidently say that as much as 40 per cent of the workload can be carried out in advance,” he added.
The GCC states have worked together to develop a broad framework for the introduction of VAT.
This agreement sets out the underlying principles of VAT laws across the six member countries. The states retain some flexibility, such as how to handle healthcare, education and the free zones for VAT purposes.
While VAT is not intended to be a tax on business, collecting the tax and remitting it to the government could involve significant compliance costs for companies, and could also have implications on their cash flow.
KPMG believes that companies need to evaluate and assess the impact on various departments and functions in the run up to the VAT implementation.
The supply chain needs to be reviewed to gauge its preparedness. VAT costs and accounting obligations need to be identified so they can be addressed.
Adapting to VAT will also mean updating or upgrading Enterprise Resource Planning (ERP) and IT systems and interfaces to correctly capture input and output VAT. Companies therefore need to account for these costs and accordingly allocate resources. Full story @ timesofoman.com/business