VAT Roll Out in GCC and Role of ERP

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Whilst GCC finance ministries are progressing to finalize the implementation of VAT in the region by Jan 2018. lack of detailed guidelines raising several questions in the businesses. The certainty is limited to the rise in inflation, applicable rates, and effective date. There are several key aspects that are part of preparation and planning but not limited to a strong ERP, qualified finance resources, and clear processes.
UAE finance ministry has confirmed that the first phase will require all companies with revenue exceeding 1 million dollars to register in the VAT regime. It is estimated that more than 300,000 companies will be impacted with the new reforms.
FAQ in Ministry of Finance site clearly highlights the importance improving financial record keeping, technology, and Financial and accounting resources to make this shift smoother and avoid resulting non-compliance and penalties.

How ERP can help in better management of Value Added Tax:

Companies that will be subject to VAT compliance will need the following:
  • Submission of periodic VAT returns electronically
  • sharing of underlying supporting documentation
  • Charge taxes and make payments to authorities
  • Maintain records for future references and inspection
  • Setup VAT deduction on inter-company transactions
  • Follow formal invoicing with sequential numbers
  • Avoid deletion of any official documents in the system.

Accounting / ERP solutions that are primarily designed for high-level internal controls and those endorsed by big 4 and global bodies shall be extremely useful to gain