When the UAE’s new Value Added Tax (VAT) initially went live on 1st January 2018, the focus for businesses was on registering as a VAT provider and on putting in place compliance and reporting measures to meet the requirements of the new legislation. With the VAT now bedding down, the focus is shifting to better understanding the impact the VAT will have on a company’s business transactions. The tool of choice to achieve these insights is a VAT impact assessment.
WHAT IS A VAT IMPACT ASSESSMENT?
As the VAT is new to the UAE, there is limited familiarity with taxation laws in the region. Early indications from initial impact assessments are that the VAT has the potential to reach out across every aspect of businesses’ operations. A VAT impact assessment is designed to assess the impact the VAT will have on the business.
THE ASSESSMENT TYPICALLY SPANS THE VAT IMPACT ON:
- Sales Transactions
- Purchase Transactions
- Imports
- Exports
- Real Estate Transactions
- Capital Assets
- Partially exempt business activities
- Long-term contracts
The outcome of a VAT impact assessment is a strategic VAT roadmap encompassing every aspect of your organisation’s operations.
WHY YOUR BUSINESS NEEDS A VAT IMPACT ASSESSMENT?
Once your business is registered for the VAT and is compliant with its reporting and record and information retention requirements, it is time to fine-tune the business. This is to ensure it is not incurring any unnecessary costs or long-term liabilities as part of the VAT system.
Your business needs to understand how to manage its VAT obligations over the longer term and to plan for optimizing its response to the VAT.
THIS INVOLVES:
- Reviewing existing business processes and end-to-end transactions to map the existing “as-is process flow”.
- Identifying all the VAT touch-points to identify the associated compliance risks.
- Assess the businesses existing capabilities.
- Develop a long-term VAT roadmap containing changes to the current “as-is” process to migrate to a “to-be” process structure.
- Reviewing the initial VAT response within the Accounting and IT functions to identify opportunities to streamline their operations and resource requirements together with any cost implications.
- Implement a training program for staff to eliminate inefficiencies in the businesses initial approach to the VAT compliance requirements.
Revisit client and supplier communications and contracts to ensure they are both fully compliant and time and resource efficient.
GAIN THE CONFIDENCE AND INSIGHTS TO IDENTIFY THE RIGHT EXTERNAL FIRM FOR YOUR TAX AUDIT TODAY!
WE WILL ENSURE THAT YOUR BUSINESS IS TAX SAVVY AS WELL AS TAX COMPLIANT.
