Sponsored: As the UAE and Saudi Arabia prepare to implement a 5 per cent value added tax in the coming days many business owners are surely questioning whether they are ready for the change to come.
In the case of the UAE it has only been in recent weeks that an exact list of which products and services are affected has emerged, leading to a last minute rush for some businesses.
Reports in the build-up to the tax have revealed that many companies are simply not prepared take the necessary steps to prepare with potentially dire consequences.
Among the findings of a survey of 330 respondents across industries including construction and engineering, manufacturing, oil and gas, financial services, retail, and consultancy in July by ACCA and Thomson Reuters were that only 11 per cent of GCC firms understood the impact of VAT on their businesses and had identified IT system gaps.
Under tax laws, the penalty for those who fail to pay VAT in the UAE is no less than Dhs500 ($136) and no more than triple the value of the tax on the transaction in question.
On top of this, the UAE’s Ministry of Finance recently revealed the fine for a first incorrect tax filing will be Dhs3,000 ($817), rising to Dhs5,000 ($1,361) for each following error.
Given that many businesses in the UAE do not have a proper accounting system and use manual bookkeeping or spread sheets the prospect of them falling foul of tax laws Is likely.
The July survey found only 29 per cent of surveyed companies were cable of supporting VAT implementation in terms of IT systems readiness, with 18 per cent of respondents indicating their systems were “partially ready” and 8 per cent saying they had old IT systems that were not capable of implementing VAT logic.
But perhaps more disturbingly, 35 per cent of the organisations were not certain if their current IT systems would be able to handle VAT.
But there is an answer, automation. Tally.ERP 9 is an easy-to-use business accounting system that makes the journey to automation very smooth and ensures businesses are always compliant.
“The software’s unique in-built error detection and correction capability mitigates any errors in data. This gives business owners peace of mind in the wake of penalties and fines for non-compliance” said Vikas Panchal, business head at Tally Solutions in the Middle East.
Clearly, given the penalties, these are issues that need to be immediately addressed.
Why waste any time? With the January 1 deadline fast approaching there has never been a better time to determine your readiness. Fill out the survey below for a free voucher to attend Tally’s upcoming VAT clinic.