(MENAFN- The Peninsula) The Peninsula
Given the speedy progress Gulf Cooperation Council (GCC) countries are making in rolling out their local Value-added Tax (VAT) legislations, VAT will soon be a reality and compliance formalities will start affecting businesses even before VAT goes live in Qatar.
Craig Richardson (pictured), KPMG in Qatar's head of Tax and Corporate Services, explained that by now companies should understand the impact of VAT on their operations and are currently working on optimising their processes and systems to ensure their VAT compliance in the immediate and longer-term future.
This will also help businesses to take control and achieve visibility beyond the VAT go-live date. Detailed requirements will vary among GCC member states, but compliance fundamentals will remain the same.
Businesses registered for VAT will need to record, assess and report VAT obligations as well as entitlements according to the local regulations and submit them to the competent authority within a certain timeframe.
Inaccurate reporting of input VAT credits can lead to losses and business disruption. Failure to meet the compliance requirements can incur risks and penalty charges, including litigation from the concerned competent authority.
'The current absence of published domestic VAT legislation in Qatar should not stop companies from getting ready as the underlying principles for VAT treatment are clear and known, whereby global indirect taxes best practice gives valuable insights. In addition to on-going compliance, early preparation can enhance continuous cash-flow, minimize VAT impact on the company's finances, avoid exposure in ongoing supply contracts and streamline operations to manage VAT efficiently Richardson added.
The pre-implementation phase provides adequate time to ensure the relevant technology and resources are in place to comply with the new tax system.
'Businesses need to build systems and processes, and embed them within the existing processes, to help them manage tax reporting complexities. This will require a new set of skills and knowledge; therefore companies need to invest in human resources and training before implementation begins Richardson elaborated. Once implemented, VAT will be levied on the supply of goods and services at a standard rate of 5 percent.
Various GCC member states have announced their plans to introduce VAT starting from 2018.
Qatar domestic VAT law, when issued, will provide details on the treatment of certain supplies as zero-rated or VAT exempt. It will also include details on the conditions for VAT deductions, VAT grouping, transactions assimilated with taxable supplies, record and reporting requirements and further definitions to enable the correct VAT treatment by companies on their supplies and procurement.
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