Who should be your point per­son on VAT?

Have you had an in­vi­ta­tion to at­tend VAT train­ing? There are quite a few on of­fer in the UAE and they are not cheap. But a trained em­ployee could be­come weaponised with knowl­edge, David Daly writes, and at­tain an unas­sail­able po­si­tion in an or­gan­i­sa­tion

The National - News - Business - - Front Page - David Daly is a char­tered ac­coun­tant (CIMA) typ­i­cally serv­ing in chief fi­nan­cial of­fi­cer or fi­nance di­rec­tor roles For a rolling archive of our cov­er­age of value added tax, book­mark thena­tional.ae/busi­ness/vat

There hasn’t been a cri­sis or un­cer­tainty in hu­man his­tory that has failed to suck in swathes of snake oil sales­men. What I hadn’t con­sid­ered was that in the case of value added tax, the GCC would also at­tract the wacky sand­wich-board men so beloved by tourists at Speak­ers Cor­ner in Lon­don.

Sound­ing off from atop soap boxes to any­one who will lis­ten to them are the de­niers. “It will never hap­pen. Re­mem­ber in­come tax in Saudi Ara­bia in 1988? Sixteen days be­fore it launched they can­celled it and no one has seen sight nor sound of it since.”

They have a point. That said, many good points lead to the wrong con­clu­sion. VAT is hap­pen­ing and will be­gin on the Jan­uary 1, 2018.

Bet­ter or­gan­ised and prop­erly funded are those look­ing for be­liev­ers, par­tic­u­larly those pan­ick­ing be­cause they’ve left it late to get started on their VAT com­pli­ance project. Of­fer­ing uni­ver­sal cures, th­ese huck­sters bang their drums to at­tract and con­gre­gate wor­ri­ers.

Have you re­ceived an in­vi­ta­tion to at­tend a VAT train­ing course? There are quite a few on of­fer in the UAE and they are not cheap. A cou­ple of days will set you back up to US$2,000. Out of cu­rios­ity why are th­ese quoted in dol­lars when we have dirhams?

Do I have a per­sonal an­gle? As an ac­coun­tant, I hate to see money po­ten­tially wasted. I’m not here to diss train­ing, its im­por­tant, but there is a queer at­ti­tude to it in the UAE. A re­luc­tance to in­vest in hu­man cap­i­tal that is likely to stem from hav­ing a tran­sient pop­u­la­tion. An­other one of those good points that is ul­ti­mately counter in­tu­itive.

You wouldn’t de­lay buy­ing a new de­liv­ery truck just be­cause it might break down. In any case, you can al­ways safe­guard train­ing ex­pense via time-ta­pered charge­backs if the trainee re­signs.

Courses of­fer a good, but ex­pen­sive, gen­eral in­tro­duc­tion to VAT. As an area of study VAT is fiendishly com­plex. As light re­fracts pro­duc­ing rain­bows, so do many VAT rules when in­ter­ro­gated. Un­like rain­bows, the lep­rechauns at the end of th­ese are col­lect­ing gold in the form of fines, not hand­ing over pots of it.

To­day it’s too late. You’ve al­ready booked the course and made an up­front pay­ment. Don’t worry about how lost your del­e­gate might get among the other at­ten­dees, you have big­ger is­sues.

Swish­ing around in­side, be­ing di­luted among the oth­ers, is your in­dus­try sec­tor with its spe­cific VAT rules. Some sec­tors are more in­ter­est­ing or have amus­ing sto­ries. Pre­sen­ters of­ten use th­ese as a method of keep­ing au­di­ences awake. You may have con­ceived the idea of cre­at­ing an or­gan­i­sa­tional VAT cham­pion but there is a pos­si­bil­ity of un­wit­tingly weapon­is­ing this em­ployee’s knowl­edge. Af­ter all there is a crit­i­cal short­age of skilled per­son­nel in the GCC.

This cham­pion could take ad­van­tage of their newly ac­quired skill pre­mium and up sticks to a bet­ter pack­age elsewhere. While this can leave an im­me­di­ate bad taste in the cor­po­rate mouth, what can truly linger is the fol­low­ing. By ap­ply­ing Guru sta­tus to one in­di­vid­ual, this risks the con­struc­tion of an unas­sail­able po­si­tion within the or­gan­i­sa­tion, its ram­parts re­in­forced with VAT ar­cana.

You might think that it would only be a mat­ter of time be­fore un­mask­ing. There are two rea­sons why this doesn’t hap­pen, be­gin­ning with the lever­ag­ing of their re­la­tion­ship with the en­tity’s ex­ter­nal au­di­tors.

Au­di­tors func­tion af­firm the ma­te­rial ac­cu­racy of an or­gan­i­sa­tion’s fi­nan­cial re­sults while val­i­dat­ing their sys­tems and con­trols more gen­er­ally. The depth of this is de­pen­dent on the con­tracted en­gage­ment. Within the fee struc­ture, your VAT cham­pion might ne­go­ti­ate con­tin­u­ing first or fur­ther line sup­port for VAT is­sues, thus act­ing as a last port of call when the in­di­vid­ual’s knowl­edge, wider peer cir­cle or Google search fails to sat­isfy a query.

Their fi­nal de­fence is to care­fully coach an­swers, so blame can be ap­por­tioned back to the in­di­vid­ual who raised the query by way of mis­in­ter­pre­ta­tion of the ad­vice given. This has a lim­ited amount of us­ages.

Your or­gan­i­sa­tion needs to de­velop a train­ing strat­egy that is tai­lored to your or­gan­i­sa­tional needs. That you need to train key per­son­nel sug­gests the use of an ex­ter­nal VAT so­lu­tions part­ner for your com­pli­ance project. Em­pow­ered as part of that process, th­ese in­di­vid­u­als can train other staffers. Ex­ter­nal courses tar­geted to this level of abil­ity is an equally good so­lu­tion.

One or two days in a salu­bri­ous setting among a group of erst­while lost souls be­ing lec­tured to by some­one who is VAT knowl­edge­able does not your so­lu­tion make.

Huck­ster­ism begets huck­ster­ism. I’m aware of one ap­proach made to a VAT pro­fes­sional by a group of ac­coun­tants of­fer­ing to pay a mar­ket day rate for VAT train­ing. Their ob­jec­tive was to lever­age the train­ing to in­crease their mar­ketabil­ity to or­gan­i­sa­tions. Hav­ing at­tended Fed­eral Tax Author­ity [FTA] road­show events I’ve seen grasp­ing at­ten­dees nest ques­tions des­per­ate for so­lu­tions on the cheap.

Post the for­mal pre­sen­ta­tion it’s not un­usual for groups to con­gre­gate around key speak­ers seek­ing clar­i­fi­ca­tion or pos­ing corol­lary co­nun­drums. In each queue, not queu­ing, will be at least one strained face des­per­ately try­ing to com­mit to mem­ory all th­ese mini con­ver­sa­tions.

I’ve seen care­ful po­si­tion­ing by at­ten­dees across the broad­est amount of tables, break­ing from jackal-like packs, hun­grily search­ing for any scrap of knowl­edge be­fore sub­se­quently re­turn­ing to se­lec­tively share what was gar­nered.

Elsewhere I’ve seen one in­di­vid­ual lift all copies of pre­sen­ta­tion hand­outs and scurry out the exit. I can’t be sure whether this was to dis­trib­ute among a favoured few later or an at­tempt to con­strain knowl­edge trans­fer. As VAT is a com­pletely new field to the ma­jor­ity of peo­ple in the UAE, train­ing will im­part many fac­toids to those with lit­tle hands-on ex­pe­ri­ence and a home au­di­ence that is mostly clue­less. What could go wrong?

Philippe Huguen / AFP

While con­sumers and busi­nesses in Europe are well ac­cus­tomed to value-added tax, in the GCC it is some­thing new.

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