Businesses who will be collecting value-added tax (VAT) can register online and subsequently file returns on a regular basis using the government’s e-services, according to the latest advisory.
The UAE Ministry of Finance has updated its website to advise companies that VAT registration will open to qualified companies three months before the roll-out, which is initially slated in January 1, 2018.
“Businesses will be able to register online using eServices,” the ministry said on its website.
According to KPMG, the latest advisory is a clear indication that the UAE government remains on track to launch VAT less than a year from now. "Based on our international experience with the VAT implementation in Malaysia, the time for businesses to prepare is tight. While some of you will have started preliminary preparations, having established a budget and project teams, action needs to be stepped up," KPMG advised businesses.
Companies, however, will need to meet the requirements prior to signing up. Registered businesses will then be required to submit quarterly VAT returns online. “It is expected that the default period for filing VAT returns will be three months for the majority of businesses,” the ministry said.
The Gulf Cooperation Council (GCC) member states had earlier agreed to collect a 5 per cent VAT from January 1, 2018, as a way to raise non-oil revenues. Details as to which goods and services will be covered have yet to be announced, with the UAE VAT law still being finalised. Businesses are advised to await the official announcement and regularly check the Ministry of Finance website for updates.
Audit, tax and advisory services firm KPMG said they expect the law to contain provisions for forming a “VAT group” which can bring both cash flow and administrative and compliance benefits. The company advised that since the filing of tax returns will be done electronically, businesses will have to make “systems changes to interface with the government portal.”
“There would be facility to file the return online. It remains to be seen what payment options will be given to businesses.”
However, there have been questions about the readiness of Gulf businesses in the implementation of VAT. Rakesh Pardasani, partner at RSM, noted that due to low taxation in the UAE, a lot of firms don't have proper accounting and record-keeping infrastructure.
“Lack of taxes has created a culture of non-existent or at times where it exists, haphazard record keeping and accounting. And when it comes to VAT, proper accounting is the backbone for proper compliance,” Pardasani told Gulf News.
He noted, though, that there has been an increasing number of companies seeking professional guidance on how to prepare for VAT, especially since the roll-out is only less than a year away.
“The days of managing businesses without any accounting records are numbered. The introduction of VAT will put the onus on businesses to ensure that they keep proper records and are assessed as to the VAT liability based on those accounting records,” said Pardasani.
He said some businesses may also have to consider a revision of their IT systems in order to account for VAT credits and collections. “Proper documentation of VAT credits and inputs is key for proper compliance. Manpower planning will be the next issue as businesses will need to identify and hire resources who are knowledgeable about VAT.”
Source: Gulf News