Participants at the KT-ICAI VAT Clinic at Khaleej Times office in Dubai on Saturday.
Dubai - There is sufficient time for SMEs to prepare themselve to meet the VAT deadline
The small and medium-sized enterprises in the UAE still need to fully prepare for value added tax (VAT), which will come into effect from January 1, 2018, leading tax analysts said in Dubai on Saturday.
Despite the fact that majority of the SMEs are not ready, there is still one month to go which is good enough for them to meet the deadline, analysts noted while speaking at the "VAT Clinic" organised by the UAE's first English newspaper Khaleej Times in partnership with The Institute of Chartered Accountants of India (Dubai Chapter) and Qadi Accountants.
Ranging from free zones to construction and from gold and jewellery to financial services, the VAT experts responded to over 150 questions from more than 100 ICAI members during the three-hour session held at Khaleej Times' office on Saturday morning.
As part of the GCC-wide agreement, the UAE and Saudi Arabia will implement five per cent standard VAT rate on certain goods and services from January 1, 2018.
The tax experts were of the view that it is time for a change for the companies to get rid of their old practices. With the dawn of new post-VAT era, they need to maintain their accounting books for at least five years irrespective of the fact that the company is registering or not under VAT regulations with the Federal Tax Authority.
They noted that the large entities - with their multinational parent companies having presence outside the UAE - had asked their local subsidiaries here to get themselves ready much earlier, therefore, they're well-prepared in advance. But it was the SMEs who had taken the call themselves about the deferment and delayed necessary preparation, and now they have realised that it would be implemented so they're rushing it.
Though executive regulations are yet to be released by the UAE's Federal Tax Authority, the tax experts noted that around 80-90 per cent of clarification is there and it's just that 10 per cent which falls into grey area or ambiguity and they would be clarified once the executive regulations are out.
Naveen Sharma, chairman, The Institute of Chartered Accountants of India (Dubai Chapter), said: "There's still a lot is to be done in terms of preparations of individual companies is as they had not started preparing well in advance in spite of government giving them almost one-and-a-half year time. They are rushing now after realising that VAT is becoming a reality."
Mayank Sawhney, director, MaxGrowth Consulting, said: "In terms of readiness or time preparedness, the large corporates had started the process much earlier. Large corporate are 50 or 60 per cent ready while 40 per cent of work is yet to be done. For SMEs, they are largely unprepared. At the most they have done is VAT registration."