VAT implementation date is less than a business quarter away.
Businesses need to be geared and prepared well in advance of the 1st of January. For many small and medium size businesses, this means they are now entering a period where they are making (or have made) decisions on how they are going to set up for this and who they will partner with.
Business owners and decision makers face a number of questions with this regard such as; who do we partner with, what should we expect from our advisors, what do we need to do to maximize the services we receive?
This first and foremost question is; who do we partner with (we will look to address the other questions in later posts)
A number of businesses have put their faith blindly in their existing external auditors or accountants. This is a mistake.
Accounting is a vast profession, with many different areas of specialism and expertise. Auditors and Accountants are not necessarily tax experts and may not understand the entirety of the VAT laws and their implementation.
The lack of tax professionals in the Middle East region in itself is one of the major challenges company’s face.
To use another example from professional services; there are many different types of lawyers. All though all lawyers would have studied law, they tend to specialize in certain areas. Which is why businesses would look to hire corporate/commercial lawyers as opposed to say a divorce lawyer to handle their company’s legal issues.
Similarly, although auditors will have a background and education in accounting; they may not be specialized tax professionals.
To give one of many examples, in layman terms; an auditor would generally review the accuracy of a company’s financial statements. They will not delve deep into the transactions of a business and understand it’s affects on VAT or the business.
Tax professionals on the other hand will examine the businesses transactions and use their knowledge of tax laws and tax accounting principles to advise and develop an accurate and tax return.
Furthermore, the aim of having an external auditor is to have someone who can provide a non-biased opinion and service to the business. When your auditor is also your VAT advisor/partner, and involved in the filing of tax returns; they have a fundamental conflict of interest as your auditor.
Similarly, when it comes to general accountants; although they may understand the book keeping element; if they are not experienced tax professionals with a thorough understanding of the VAT laws in the region, they are geared to make mistakes – which can not only be costly for the business, but have further business and legal repercussions.
Tax professionals and those with a thorough understanding of the regional VAT system and laws are able to not only able to expertly manage your tax returns, but also advise on the effects of VAT on cash flow, accounting systems and invoicing in general.
Businesses, especially small and medium sized businesses who cannot afford to make mistakes should look to choose a partner with not only a strong accounting base, but also a thorough understanding of the VAT laws in the region and experience in Tax accounting.
At Oblique Consult, our team has in depth knowledge and expertise in Tax law and fundamentally with the VAT laws of the UAE and the GCC region. This comes with years of experience in mature markets where VAT is already in place and from working with companies in the UAE who are already geared up for VAT in the region.