Sage: VAT implementation requires training to raise awareness levels
The first phase of registration will target larger organisations first for both VAT and excise tax
Value-added-tax (VAT) registration will begin mid-September in time for the official roll-out in January 2018, however small and medium-sized businesses are concerned about the introduction of VAT, as well as new systems.
Sage recently hosted a Sage 300 User Conference on VAT, with a deeper focus on how VAT works for different goods and services, the regulatory requirements for VAT accounting and implementation steps.
The mandatory registration limit in the UAE is set to AED 375,000 turnover in 12 months and half of that (AED 187,500 turnover) as the optional registration limit, therefore a large number of companies in the region will be affected.
Aaron White, regional director for Sage Middle East, said: "VAT is a new concept in the GCC with virtually no awareness levels. Therefore, the public and private sector must be trained and the correct systems and procedures implemented. Naturally, this requires time and in our experience it can take between nine to 12 months to make the full transition after legislation is released.
"While VAT systems are in place in 150 countries around the world, the economic makeup of the GCC states is different to many other countries, with a large public sector and strong start-up and SMB segments."
White continued: "VAT is different in its impact and implementation in every country, therefore it is difficult to predict how its introduction will unfold in the UAE before legislation is published."
Sage introduced its enhanced Sage 300 is a business management solution at the conference. It now includes a VAT baseline setup and invoice printing in Arabic, will enable mid-market companies to streamline their processes and gain visibility into their businesses.
"At Sage, our accounting software is designed to help you manage, process and submit VAT quickly and easily, giving you more time to focus on your business rather than on red-tape and administration, said White.
Sage aims to educate and support its channel partners through the implementation process, and minimise costs where it can, such as help Sage customers avoid any penalties.
White explained: "VAT, by its very nature, will not be an additional expense for any business, including Sage and its channel partners. VAT will be a cost to the end consumer who consumes the goods and services.
"However, it will have an impact on cash flows and also an indirect cost like investment in the accounting systems and cost of training employees and upskilling partners, etc. Cost on non-compliance can be significant as that would attract fines and penalties."
VAT will initially be introduced in the UAE and Saudi Arabia, with other GCC states set to follow throughout the course of 2018.