In the UAE, Value Added Tax (VAT) is all set to be integrated from 1st January 2018. The proposed tax rate is to be 5% as per the regulations. VAT is one of the most usual types of consumption tax that is present throughout the world. Value Added Tax is an indirect form of taxation process that is taken on an increment basis, depending on the value added at every step of manufacturing or sales/ distribution. Now, according to the recent development, more than 50% of the organizations in UAE are gearing up for the implementation of VAT framework. But the pertinent question that remains to be answered among the SMEs is how many are equipped to integrate VAT in their businesses.The following is a comprehensive step-by-step guide to assist organizations in the UAE to become ready for VAT integration, which may take between 8 and 12 months or even longer if some of the resources are outsourced, for instance, IT.

1. Preparation for the project

Organizations need to build a definite project plan and safeguard the essential external and internal resources and also make sure the stakeholders in the company are aware of it, as Value Added Tax is not any finance project. It impacts all transactions and deals and thus touches every aspect of the company. VAT tends to influence finance, IT systems, legal teams, human resources and even inter-organizational functions. IT systems are one of the mainstays to this framework because they need to be constantly upgraded to deal with the VAT. The overall preparation will require a considerable amount of expenses that organizations will need to know about.

2. Assessing the impact

SMEs are required to conduct a study on the overall impact of the VAT and understand its influence on commercial elements, prioritize the specific problems and make adjustments for the integration. This is a major step as it strengthens the foundation for VAT integration into the company. The evaluation is aimed to shed light on its different effects on the operational, organizational and financial levels. Ideally, the study of impact requires 8-12 weeks to show the outcome, and that leaves a relatively short period, more or less nine months, to influence the integration.

3. Design and implementation

Organizations require the systems to be designed properly and train the employees regarding the process requirements for VAT. They should integrate significant alterations to controls, systems, governance and reporting. Depending on the study of impact, they need to create a road map for determining the sufficient changes needed, deciphering the requirements for scheduling and planning for the upcoming days. Incorporating the changes across all the levels in the company generally begins with chalking out the transaction guideline to determine the VAT obligations of the company. This should solidify the foundation for making alterations across multiple verticals in the business like supply chain, IT and human resources.

4. Testing and registering

Organizations are required to register for Value Added Tax and test their business models to make sure they are capable of reporting and compliance. Companies need to incorporate the necessary changes brought into the operations and educate and inform the staff about their new responsibilities to attain the desired outcome. Examining the VAT system, methods and controls during the ‘live’ phase (to be adopted from January 1, 2018) is crucial to allow for the seamless and accurate completion of the initial VAT return.

Uaevatexpert.ae’s efficient VAT consultation services leave no stone unturned for the smooth integration of VAT within your business

Flustered about the new VAT implementation procedure? Confused how to integrate within your organizational framework? You have no reason to worry. Uaevatexpert.ae with its excellence in VAT consulting offers you a comprehensive assistance so that your business runs smoothly. Your company will be VAT- ready in no time with the guidance of our skilled experts specially trained in handling VAT related issues.

With the inclusion of VAT system in UAE, the companies are required to break away from how they functioned earlier. Uaevatexpert.ae is armed with the adequate knowledge to offer services that will not only build your organization’s credibility but will also enhance it even after the tax is implemented, without hindering the process of revenue generation.