– Event organized by American Chamber (“AmCham”) with speakers from Deloitte
The United Arab Emirates and the Kingdom of Saudi Arabia introduced Value Added Tax (VAT) on 1 January 2018. Bahrain has also signed the unified VAT agreement for The Cooperation Council for the Arab States of the Gulf (GCC) and is committed to bringing VAT into force in the Kingdom by 1 January 2019, although an exact date has yet to be set.
AmCham, in supporting local businesses and bringing a wider awareness to the public, invited Deloitte, a global leader in the provision of indirect tax advisory services, to present at a VAT event on 9 April 2018 in Swiss-Belhotel, Seef, Bahrain. The event was attended by representatives from businesses operating in various industries as well as government officials.
Bruce Hamilton and Michael Camburn, partners at Deloitte Middle East shared their experience on lessons learnt in both UAE and KSA. Among the examples given, they highlighted that many businesses underestimate the scale of the VAT implementation project and consequently, many of them did not start such projects until the law was released and were thus faced with tight timescales and deadlines for implementation.
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“The publication of the draft law ‘kick-started’ the implementation process for many businesses. However, many organizations did not appreciate the impact that a VAT implementation would have on their business operations. Inter alia, they underestimated the impact that the accounting for VAT would have on the changes required to their IT systems. In addition to this, many businesses did not appreciate the impact of VAT with respect to the relationships within their supply chains (both upstream and downstream), both which are fundamental to the implementation,” explained Camburn.
“Deloitte has helped many companies across the GCC and wider Middle East region through the VAT implementation phase. We suggest to start as early as possible: consult and discuss with your key stakeholders and approach to deal with the VAT implementation project. A strong Project Champion is a must!” added Hamilton.
Camburn also said that “VAT is not only the finance’s responsibility, it involves also other functions such as purchase, sales, IT and legal teams, etc. It is especially important to consider the change as a whole for the business stressing the examples with the invoices and contracts.”
Although Bahrain is yet to publish the first draft of the VAT regulations, preparatory works can already begin based on the Unified Agreement that sets the principles of VAT in the GCC region.