VAT compliance driving digital transformation of companiesRoemarie Ann Periabras
VAT compliance driving digital transformation of companies
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.
This is changing the way businesses collect, format and report tax information, and accelerates reporting and filing obligations. According to Sherif El Kilany, Mena tax leader at EY,” The overwhelming view is that VAT compliance has actually accelerated the digital transformation of companies across the GCC.”
So, in addition to be a significant revenue stream, the roll out 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% 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.
David Stevens, GCC tax implementation leader at EY says,” 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,” he added, “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.”
El Kilany added, “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.”
Source: Khaleej Times