The time is finally coming closer. 1st Jan, 2018 is just a few months away and GCC is well-prepared for the VAT launch to decrease the fiscal deficit in UAE. But the implementation of VAT in UAE companies is a hard nut to crack. You must be wondering why it is so. Here is the answer. Thompson Reuters & ACCA conducted a survey on VAT readiness of UAE companies and it has revealed some interesting facts:
VAT is welcomed in UAE but crucial challenges are lying ahead of organizations!
A new government policy takes a lot to understand and implement, especially where monetizing aspects are included. You might have invested significantly in setting up the IT systems in your organization. The IT system such as Accounting, Point Of Sale (POS), and ERP (Enterprise Resource Planning) would be most impacted by the implementation of VAT in UAE.
Let’s take a look at some of the challenges that would come in way of implementing VAT in UAE companies.
Training a Staff for VAT compliance and enabling
You have to train your staff for the impact of VAT in every business transactions and tax calculation.
Examining a current system for VAT compliance
The taxation module of in placed ERP and accounting systems need to be checked against the accommodating VAT as one of the taxation components. If the current system is not apt for including VAT, the decision should be made regarding developing a new system or making a current system VAT compliance.
Locating hidden VAT related risks in current ERP system
Considering the VAT accommodation is possible in current ERP system, but there needs to be a rigorous audit of each and every accounts, supply chain, and finance IT system modules where money transactions are involved.
Amendments in current ERP system for VAT compliance
If the audit says that current ERP system can be transformed for VAT ability, the business needs to find out an IT Service partner to carry out the demanding amendments without affecting the workflow of the organization.
Setting up a new ERP system from scratch
If the audit result reveals that there is no point of making amendments in the current system. A new system developed from scratch would suffice the purpose and supports the future scope of the company very well. In such case, you would have to find out the right IT solution partner for drafting a cutting-edge solution that is complied with VAT, new trends, and future scalability.
The efficient implementation of VAT laws for reducing cost and improving ROI
The VAT is going to cost you for sure. And the cost would come to customers, too. In the situation where product price is going to be higher than before and the competition is huge, you have to have a system that helps you implementing VAT laws effectively in the system minimalizing the VAT implication on product price and thus by helping in the improvement of revenue generation of the business.