GCC countries are planning to introduce the Value-Added Tax (VAT). Each member state of the GCC will establish their own separate national legislation concerning VAT and the detailed compliance requirements and set of rules will be outlined in respective legislations.
Is your organisation geared for the changes arising from these new legislations wherein compliance is mandatory?
What is VAT?
VAT is an indirect tax applied upon the consumption of goods and services. VAT is levied by VAT registered businesses, which make supplies of goods and services in the course or furtherance of their business. VAT will also apply on the import of goods. VAT is levied at each stage in the supply chain and is collected by businesses on behalf of the Government. VAT is ultimately incurred and paid by the end consumer.
Although VAT will apply to most goods and services, there are some likely exceptions and exemption which would be clear upon the legislation being released.
How does VAT work?
VAT registered businesses charge and add VAT to the value of goods and services they supply. Such businesses can also reclaim VAT incurred on goods and services acquired for business purposes (subject to some restrictions) such as the purchase of raw materials and other consumables used for the purposes of business. For imports, VAT is charged at the first point of entry into home consumption (when customs duty may also apply).
Calculating and reporting VAT
An inherent feature of the VAT is the self-assessment nature, meaning every business which is VAT registered (or required to be VAT registered) must record, assess and report its VAT obligations and entitlements, in accordance with the law, to the tax authorities. Following registration, a VAT registered business is required to charge and remit VAT collected to the Tax Authority on a periodic and regular basis.
VAT registered businesses are required to file the VAT Return usually by the end of the calendar month or quarter as detailed in the legislation. VAT returns may be required to be filed online and can be in Arabic or English or Both.
Invoices
Each business selling goods or services would have to issue VAT Invoices differentiating between the amount of goods and service, and VAT. These invoices must be produced and issued by VAT registered businesses as documentary evidence to VAT governing bodies to show compliance with the VAT law. Record of VAT invoices shall be maintained for a specific number of years as decided by the VAT governing bodies.
How can KCS help?
KCS can provide a complete range of services to address all elements of VAT implementation and ongoing compliance on Oracle E-Business Suite comprising of:
- Consulting services to understand your business processes and map the VAT legislation to help understand the impact of VAT laws on your business
- Conduct Tax Workshop specific to your organization indicating VAT application changes in your system
- Setup and configure Oracle E-Business Tax Engine to replicate the legislation into system rules
- Identify the R.I.C.E components (Reports, Interfaces, Conversions & Extensions/ Enhancements) and evaluate the impact of Tax on the same
- Conduct multiple rounds of testing to replicate real-time business scenarios across procure-to-pay and order-to-cash cycles
- Provide cost effective and efficient solutions on Document Management for VAT storage and retrieval
- Provide VAT compliant reports from the system