The adoption of value added tax (VAT) by GCC countries in 2018 is expected to generate additional revenues of more than $25 billion per year, according to EY. The advisory firm said the launch of VAT represents a major shift in tax policy "that will impact all segments of the economy and lead to a fundamental change in the way businesses operate across around the region".
It added that the extra tax revenues will allow GCC governments to amend other fees and charges and increase infrastructure investments. All GCC countries are working towards VAT implementation by 1 January 2018 to avoid transaction and sales issues that could arise from intra-GCC trade. Businesses that are not ready by the VAT go-live date may suffer fiscal consequences from the inability to pass on the underlying VAT to the end customer.
Sherif El-Kilany, MENA tax leader, EY, said: “The expected VAT laws are not ‘business as usual’ and may require several months for companies to successfully integrate a VAT functionality into their systems. It is a unique and transformative time for the region.”
David Stevens, EY's newly appointed VAT implementation leader, added: “As businesses prepare to implement VAT across numerous sectors, they will need to invest in analysing, redesigning, developing and implementing updated systems, processes, contracts and business arrangements to match the requirements of the new tax system."
Last month, it was reported that the UAE will use the money generated from VAT to launch new developments projects, according to Rashid Al Blooshi, Abu Dhabi Securities Exchange CEO.
Source: Arabian Business