GCC firms not prepared for VAT in 2018: survey

Only 11 percent of the region’s businesses understand how the value added tax (VAT) will affect them, a survey conducted by the Association of Chartered Certified Accountants (ACCA) and Thomson Reuters said, six months before the GCC states implement the tax.

With 49 percent of the firms saying they are yet to evaluate that impact, the survey raised concerns about the available advice and expertise on the matter, especially since regional regulatory variances will probably test the finance and information technology capabilities of businesses.

Over 330 people from various business sectors across the GCC region have participated in the survey. It also showed that 38 percent lacked in-house resources, while 44 percent described their resources as “limited.”

Meanwhile, 88 percent of firms said they didn’t allocate budget provisions for the VAT in 2017 ahead of its implementation, and 25 percent of them said they engaged with their tax advisors on the subject.

"The lack of preparation is a concern; companies should be using the pre-implementation period wisely to understand compliance, legal obligations and the financial risk associated with VAT," said Chas Roy-Chowdhury, head of taxation at ACCA.

“The VAT will generate new revenue streams for the governments, encourage foreign investments and help diversify the economy,” said Pierre Arman, Thomson Reuters’ market development lead for Tax and Accounting.