(MENAFN- The Peninsula) By Satish Kanady / The Peninsula
The soon-to-be implemented Valued Added Tax (VAT) in Gulf Cooperation Council (GCC) countries is expected to initiate a massive wave of digital transformation as businesses prepare to ensure compliance with the new tax law, an Oracle and Harvard Business Review (HBR) study predicts.
The study that is based on a poll of 450 senior company executives from across GCC reveals that 73 percent of businesses consider VAT implementation as a key opportunity to initiate wider digital transformation projects within their organization.
With businesses required to automate their processes to ensure that transactions are captured flawlessly for VAT compliance, 66 percent of respondents also said that they would consider transitioning their business processes from on-premises systems to the cloud if major cost savings can be identified.
'Cloud adoption across GCC countries is growing at a rapid pace and becoming mainstream as businesses now realise that cloud applications offer them speed, innovation, security, and better return on investment. IDC estimates that Public Cloud spending across the META (Middle East, Turkey and Africa) region will reach $715m in 2017 and VAT compliance is expected to further drive this trend, said Arun Khehar, senior vice president SaaS, ECEMEA, Oracle.
'There are several benefits of placing tax functionality in the cloud, as the applications are updated by vendors on a regular basis; if the amount of VAT changes, or if another tax regulation is put in place, system upgrades will be automatically rolled out with the next release.
With the VAT compliance deadline quickly nearing, the Oracle/HBR study also explored the current VAT preparedness levels of businesses across GCC. While 21 percent of respondents confirmed that they have initiated preparations to be VAT compliant; 30 percent indicated that they currently have limited information on VAT.
In addition, 47 percent of respondents said that they are awaiting further guidance from local governments before initiating their VAT compliance project. On the biggest obstacles on their journey to be VAT-compliant, 68 percent of respondents said that managing business process changes would be a key challenge.
And 38 percent of respondents cited a lack of qualified internal tax experts and another 35 percent were found to be uncertain about the changes that a new technology implementation would bring.
'With just a few months until VAT goes live, many companies urgently need to change their business processes, IT systems, and scale up their workforce, said Aarti Mohan, ERP and EPM application strategy leader, Oracle.
'Our advice to all businesses is to start now with a 360 assessment across the business to evaluate the potential impact and transformation needs to quickly become VAT-compliant.
Oracle polled 450 senior executives from across the GCC countries from June-July 2017 to analyze the impact of VAT implementation on the regions' Information and Communications Technology (ICT) landscape.
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