VAT awareness rises among GCC firms

MORE THAN 60% FEEL WELL-INFORMED ABOUT TAX THAT COMES INTO EFFECT JANUARY 2018, ACCORDING TO SURVEY 33% rise in respondents who feel well informed on VAT. 63% believe VAT will be introduced very soon in GCC.

The majority (more than 60 per cent) of GCC businesses are now aware of the implementation of a value added tax in the region starting January 1, 2008, according to the latest survey results from a series of surveys conducted by audit, accounting and tax advisory firm Deloitte.

Deloitte has been conducting regular pulse surveys about how businesses and executives in the GCC are preparing for the implementation of VAT. Compared with Deloitte’s second Indirect Tax Survey conducted in May 2017, the findings of the new survey, launched in July, shows businesses have a more positive outlook on VAT.

Compared to previous statistics generated from the first Deloitte Indirect Tax Client Survey, GCC businesses have shown a turnaround in their views towards VAT. They are better informed and are becoming more aware of the impact of the indirect tax.

“It is positive news that the majority of respondents feel very well-informed regarding reports of the introduction of VAT in the GCC and even more so that the number of respondents feeling this way has increased to 60 per cent from 25.6 per cent since the first survey. This means awareness about VAT in industry is increasing,” said Justin Whitehouse, Deloitte Middle East Indirect Tax leader.

Rise in awareness

The latest survey results showed that nearly 60 per cent of respondents feel very wellinformed about the introduction of VAT, whereas in the previous survey launched in April, only a quarter of respondents felt well-informed. This represents an increase of 33.1 per cent of respondents who now feel very well informed, indicating a heightened awareness of VAT among executives and businesses in the GCC.

This increase is likely to be the result of the efforts that have been put in by the governments especially by Saudi Arabia and the UAE to communicate with taxpayers over the last several months.

A significant 63 per cent of respondents also believe VAT will be introduced very soon in the GCC. This statistic shows that respondents now have a greater understanding regarding reports of VAT, as less than half of respondents in the first survey believed VAT would be introduced very soon.

Latest data shows half of the survey respondents believe they will be ready for VAT by 1 January 2018.

“While half of the respondents indicated their business will be ready for VAT and have most likely taken steps to become compliant, the other half of respondents should start considering the likely impact VAT will have on them at the soonest, and begin preparations to ensure compliance with the VAT laws,” said Whitehouse.

With the imminent VAT implementation, tax practitioners, technology consultants and relevant government departments are gearing up for the new tax regime across GCC. In the UAE, the Ministry of Finance has been conducting countrywide awareness campaign to educate various stakeholders on VAT.

Separate legislation

In preparation for the GCC wide implementation of VAT, each member-state of the GCC will establish their own separate national legislation concerning VAT and as such the detailed compliance requirements and set of rules will be outlined in respective legislation.

The GCC VAT Framework Agreement allows member states until January 1, 2019 to implement the tax.