Start preparing for VAT now
— Start preparing your business to be value-added tax (VAT)-ready immediately, especially if you haven’t already started on digital transformation within your company, Oracle experts stressed on Wednesday.
Speaking to Khaleej Times, Aarti Mohan, applications strategy leader for the ECEMEA region at Oracle, revealed that several companies in the UAE have already started the assessment and implementation to be VAT ready.
However, she also noted that some companies continue to take the situation lightly since the law isn’t ready yet.
“I would say that you need to plan for it now,” she urged. “The readiness for small- and mediumsized organisations will definitely be a challenge, however large organisations understand the need for being up to speed and have already started taking the necessary steps.”
Mohan’s comments follow a recent survey by EY on the preparation of GCC companies for the VAT. The results show that 50 per cent of the businesses surveyed reporting that they have not started any preparations. With 10 months to go before the GCC VAT is implemented, 51 per cent of businesses reported that VAT compliance will be their main area of focus, while just eight per cent of respondents said they would be concerned about procurement considerations, and 10 per cent reported they will look to address customer and vendor pricing as a priority.
Asked what steps companies need to immediately start taking on their road to becoming VAT compliant, she said: “First of all, do an impact assessment of your processes and determine what are the touch points of the VAT, and if you have the relevant systems to support that type of configuration. Secondly, look at putting technology into the mix. Look at how you can determine, automate, and calculate the tax, and then plan on how to finally close your tax process with provisioning, cashflow impacts, and reporting. An important point to note is that you don’t need full visibility into the law to do these things to start off.”
“The third thing that you can do is simulate some tax transactions [using special software or programs],” she added. “Start doing this to see if you are ready with all the touch points and then see how you can take it further.”
More importantly, she highlighted the role that the cloud will play in the UAE’s VAT plans. “From a technology standpoint, it is very important to have standardised enterprise resource planning (ERP) and the most risk-free way to do this is through the cloud. This is where all the digital transformation processes are w taking place, so we would recommend looking at cloud adoption for an ERP to be VAT-compliant.”
Similarly, Si-Mohamed Said, head of marketing for applications for the ECEMEA region at Oracle, noted that the arrival of the VAT is going to be one of the trigger points for companies that have not yet started on their digitalisation transformation journeys. If a company is not automated, then there is a danger of their processes breaking, and the cost of violations that they will have to pay for not being complaint will be very severe.
“Since it is a legal requirement, you have to be ready for it. VAT will be a driver for bigger transformation within some companies,” Said noted.