A vast majority of firms in the GCC have not made budgetary provisions for VAT, according to a new survey.
This is despite analysts’ prediction that VAT will increase costs for businesses and add at least two percentage points to inflation in 2018, found the survey conducted According to the study which was participated Only a quarter of firms had engaged with a tax advisor on VAT, the survey found. Just 12% of the organizations had budgeted for VAT implications in 2017, it showed.
Among the clear majority that had not, 16% said they had not thought about their VAT plans yet, 7% stated that they believed VAT would not impact them, and 68% said they had not made budgetary provision for VAT because they were waiting for further clarity on the framework.
Many organizations in the GCC still need to address the ‘VAT readiness’ of their technology platforms and tools, the report said.
Less than one-third (29%) of the firms surveyed had an IT platform in place capable of supporting VAT implementation, according to the report.
Meanwhile, 18% of respondents said their platforms were only partially VAT-ready. Close to 10% stated that they were challenged Half of the respondents said they plan to handle VAT in-house The findings are in line with another survey The consultancy said 69% of GCC businesses expressed concerned that they may not be prepared for VAT introduction in January 2018.
About 71% of the manufacturing industry respondents said they would need the help of VAT specialists, whereas 52% of respondents from energy, resources and utility sectors said expert advice would not be needed.
While 96% of respondents confirmed they were aware that VAT is going to be introduced in the GCC, less than half believe that VAT will be introduced in the very near future, according to the survey.
Despite administrative and technical challenges, the six GCC countries are planning to introduce a 5% value-added tax (VAT) at the beginning of 2018.