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Businesses need to be VAT ready: Experts

Businesses need to be ready for Value Added Tax (VAT). The General Tax Authority (GTA) has always mentioned that they would give businesses 6 to 8 months to be VAT ready, said experts talking in webinar, 22 Mar,2021.

The webinar organized by PwC on Qatar’s annual tax update discussed general update VAT (and any other indirect taxes) in Qatar, Tax Technology, E-invoicing, Digital tax enablers, Corporate income tax and Transfer Pricing updates.

Value Added Tax (VAT) is a tax on consumption which is generally a tax on the end use consumer of a good or service.

Speaking during the webinar, Sajid Khan, Partner – Qatar, Tax and Legal Services Leader, PwC said, “We have gone through a uncertain time because of the pandemic but in the last few months we have seen positive signs. Domestically there was change of new tax administration portal coming in with issuance of the new tax law in 2018 and the new executive regulations coming in 2019 which brought a lot of changes to the withholding tax regime. There have been mandatory requirements introduced which are going to affect both multi nationals who are operating in Qatar and also Qatari companies who might have taxable entities.”

“With blockade lifting, the interest in news of VAT has significantly increased as there has been recent market activity as number of companies just in last few months have been preparing for VATs. QFC has already issued a concessionary statement of practice on some tax incentives and we are expecting the State to do something similar in near future. So, there will be tax developments coming on the horizon in this area,” he said.

Jennifer O’Sullivan, Partner – Tax and Legal Services at PwC, highlighted the VAT in GCC, the way it works, and different types of treatment expected, and things needed to know in the coming months to be VAT ready.

She said, “From Qatar’s perspective the General Tax Authority (GTA) has always mentioned that they would give businesses six to eight months to be VAT ready.

We need to be cognizant of the fact that some of the detailed legislation might not be released at the very outset of the announcement. As such it is very critical for businesses to move ahead with the implementation at this point”.

Across the region and outside the region, usually it takes a minimum 6-8 months to implement in businesses and in some cases, it can take to a year depending on the size of the organization and the complexity of the various transactions it undertakes. Once the VAT becomes live in Oman and Qatar, then Kuwait will be the last GCC country to implement it, she added.

She said, the critical thing that all businesses need to do now is to look at all their transactions and see what the VAT treatment will be applicable. And for different sectors, there will be specific VAT rules and this difference between standard rated and zero rated and exempt will be of critical importance. There will be a specific list in the VAT legislation like transactions and activities that will be subject to VAT at zero percent and those that will be exempt from VAT.

The various sectors that will be impacted by these different VAT treatments are financial, energy and utilities, real estate, transportation, education and healthcare, telecoms, and retail sector.

Addressing the participants, Jay Riche, Partner – Middle East Digital Solutions Leader, PwC and Tadek Nelson, Digital Solutions, Manager, PwC shed light on overall implementation of the VAT from the technology perspective regionally and globally.

Jay said, “When we look around the world we see many technologies that are deployed by many leading taxing authorities. We are seeing governments use sophisticated data analytics, systems, and data mining to effectively monitor transactions that are happening with the taxpayers. What taxing authorities are doing has a trickle-down effect how taxpayers need to react and prepare to stand up against potentially being audited and certainly from a compliance perspective.

“We have to make sure that the system and the technology we have in place are very effective and very strong so that we can ensure the maximum amount of complete compliance as possible. He discussed about what is tax technology and according to PwC analysis about a 140 different types of tax technology tools in the market that taxpayers can use to help manage the tax function. “

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