How VAT is driving digital transformation

How VAT is driving digital transformation
The rollout of VAT is now clearly seen as a means of modernising the economy and putting the digital journey on the speed track.

Dubai - Implementation of new tax requires significant commitment of resources and some organizations do not have the systems



By Staff Report

Published: Fri 6 Apr 2018, 9:34 PM

Last updated: Fri 6 Apr 2018, 11:35 PM

Tax authorities in the GCC are starting to use sophisticated digital platforms that require taxpayers to submit data in real time or near-real time, prompting companies in the GCC to enhance their digital capabilities.
"The overwhelming view is that VAT compliance has actually accelerated the digital transformation of companies across the GCC," said Sherif El Kilany, Mena tax leader at EY. "So in addition to being a significant revenue stream, the rollout of VAT is now clearly seen as a means of modernising the economy and putting the digital journey on the speed track."
It was found that 77 per cent of delegates at EY's recent Mena Tax Conference believe that digital will have a significant impact on the way authorities collect, administer and enforce taxation in the mid-term. "Almost all tax professionals polled at our tax conference revealed that their tax administrations in MENA have digitalised or are in the process of digitalising their operations in the next 1-2 years," El Kilany noted.
Respondents to the poll also showed strong reservations around the transparency requirements. More than 75 per cent of them expressed deep concerns on the possible impact for their businesses. Almost all of the poll respondents believe that increased tax transparency will result in an increased number of tax disputes and tax risk profile.
"VAT implementation requires a significant commitment of resources and some organisations do not have the systems, processes and people in place to enable them to apply VAT accurately and efficiently," said David Stevens, GCC tax implementation leader at EY. "Most local businesses did not have VAT capabilities already built into their IT systems, while international businesses have had to introduce unique local VAT rules and codes into their ERP systems."
With the advent of cloud-based solutions, the cost of deployment and maintenance of large applications has come down significantly translating to lower technology costs. In parallel, the cost of sub-optimal compliance is becoming steeper, with transparency and information sharing between and with tax authorities becoming paramount.
"In the future, companies will report and pay their taxes faster, and in turn, will resolve any issues they face faster. The technologies to make this happen are emerging onto the finance scene globally; they're touching every industry. The regional tax function will become far more sophisticated than it ever has been before," El Kilany added.
- business@khaleejtimes.com


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