VAT implementation in GCC countries

AZDAN BUSINESS ANALYTICS │ ORACLE+NETSUITE SOLUTION PROVIDER 1

GET READY
FOR THE VAT
IN THE GCC
COUNTRIES


WHAT IS VAT?
“Value-added tax (or VAT) is an indirect tax added to a
product’s sales price. It represents a tax on the value added
to goods or services throughout their production process.
A value-added tax (VAT) is a type of general consumption tax that is collected
incrementally, based on the surplus value, added to the price on the work at each stage
of production, which is usually implemented as a destination-based tax, where the tax
rate is based on the location of the customer.
The Gulf Cooperation Council (GCC) – of which the UAE and Qatar are member states
along with Saudi Arabia, Kuwait, Bahrain, and Oman – will start implementing the Value
Added Tax (VAT) from 1 January 2018. Each Member State will integrate the regulations
into their local law. The common legal framework for the introduction of a VAT system in
GCC countries is now set. Globally, VATs raise about a fifth of total tax revenues both
worldwide and among the members of the (OECD).
The UAE published its VAT law on 27 August, confirming many of the details of the
domestic VAT rules which had been signaled in an earlier Frequently Asked Questions
document issued by the Federal Tax Authority, such as the sectors eligible for
exemptions and zero-rating. The publication of the law is the first step in the
establishment of the complete VAT framework in the UAE.
There are two main methods of calculating VAT: the credit-invoice or invoice-based
method, and the subtraction or accounts-based method.
Using the credit-invoice method, sales transactions are taxed, with the customer
informed of the VAT on the transaction, and businesses may receive a credit for VAT
paid on input materials and services. The credit-invoice method is the most widely
employed method, used by all national VATs except for Japan.
Using the subtraction method, at the end of a reporting period, a business calculates the
value of all taxable sales then subtracts the sum of all taxable purchases and the VAT
rate is applied to the difference. The subtraction method VAT is currently only used by
Japan, although subtraction method VATs, often using the name "flat tax", have been
part of many recent tax reform proposals by US politicians. With both methods, there are
exceptions in the calculation method for certain goods and transactions, created for
either pragmatic collection reasons or to counter tax fraud and evasion.


WHAT COMPANIES NEED TO DO?

The implementation of value-added tax (VAT) could pose some operational issues to
many businesses in the Gulf Cooperation Council (GCC) region, especially if they have not
taken any action to prepare for the new VAT system, according to industry experts. The
good news is our consultants are ready to help you manage all your Value Added Tax
seamlessly.
However most of the required tasks you need to do are:
• Your specialized team needs to study the new tax law, examine the impact of VAT on
your organization’s operations and modifying your IT systems and business processes.
• You can order the businesses guide from the government on how to fully comply with
VAT once the legislation is issued.
• Once the legislation is issued, make every effort to align their business model to
government reporting and compliance requirements
• You should be able to reconcile your VAT back to the GL accounts but other than that,
all VAT reporting should be done from your transactional data. This means 2 GL codes,
one for AP and one for AR is perfectly sufficient.
• It is better to work through a detailed impact assessment with a trusted business partner
to guide your team through the implementation and operation phases.


VAT ON
SALES
VAT RETURN
REPORT
TAX REPORTING WITH CONFIDEDNCE
VAT Reporting Tool will provide one comprehensive solution to generate VAT return
report. Zero Level transactions will be imported into the system using data management
module. Data management tool can integrate with different source system (Oracle EBS,
People Soft, Excel Sheet .. Etc). VAT Return Report will consist of the following parts:
• Net VAT Due: The system calculates how much VAT should be paid to or reimbursed
• VAT Credit carried forward from Previous Period: The system calculates the carried
forward amount if the Net VAT due amount is negative.
• Total VAT due for current period: The system calculates the difference amount
between VAT on Sales Items and VAT on Purchases.
• VAT on Purchase Items/Sales Items: The system calculates the amount, adjustment,
and VAT amount per each Purchase/Sale item based on the Purchase zero level
transactions.
• Amount: The amount will be the total transaction value of Sales or Purchases. Also,
each transaction amount is appropriately mapped to the VAT return report based on
the Tax Code ( Example: Exempt, Standard Rate)
• Adjustments: The system uses this field if there is a change in circumstances ( e.g.,
Goods sold in a previous period were returned in the current period ). Also, the user
can add an attachment to justify such adjustment.
• VAT Amount: The system calculates VAT amount report automatically based on zero
level transaction data.
VAT ON
PURCHASES


Drill down to Sales or purchases Transactions;
Add an attachment to justify the adjustment value.
COMPLIANCE WITHOUT COMPROMISE
Oracle Tax Reporting will be used to view Zero level sales transactions. Azdan’s
Consultants will implement the system to allow the user to drill through to the data
source ( Oracle EBS , People Soft , etc ). Also, the system will allow the user to create its
own dashboard to present data in graphical way.
Also, the user can add an attachment to justify the adjustment value.
Documents can be attached to individual data cells by way of URLs.
Each data cell can contain multiple documents attached by one or more users,
depending on the permission level.
Moreover, System reconciles GL VAT Receivables and GL VAT payables with VAT on
purchases and VAT on Sales that the system calculates their value from Account
Receivable module and Account Payable Module.


VALUE OF VAT REPORTING BY AZDAN
Azdan Business Analytics is delivering end-to-end business management solutions that
help decision makers obtain 360-degree view of the business. We combine our
international capabilities and local market knowledge with our extensive range of skills
and industry expertise to implement first in class Enterprise Performance Management
(EPM). Our tax reporting solution encompasses all stages of the tax provision and
country-by-country reporting processes including tax automation, tax data collection, tax
& accounting calculation and reporting & analysis. Some of our true values are the
following:
• Consolidation of the VAT for multiple legal entities under same Tax registration ID
• Elimination of inter-company transactions
• Generate tax return reports
• Calculate all tax proportions
• Accurate calculations for net tax due or reclaimed according to regulations
• Workflow for each tax reporting cycle
• Reporting and analysis
• Supports multi ERP systems integrations
• Supports multi language
• Integration with MS office applications
• Designed for corporate clients for controlling and reporting vat return report
• Supports reconciliation between VAT return report and VAT GL accounts


WORLD’S TOP LEADERS TRUST AZDAN
Nakheel is one of the world’s leading developers and a major contributor to realising the
vision of Dubai for the 21st century: to create a world class destination for living, business
and tourism. Nakheel continues to deliver and enhance an iconic portfolio of innovative
landmark projects in Dubai across the residential, retail, hospitality and leisure sectors.
The introduction of a value added tax (VAT) in the Gulf Cooperation Council (GCC)
countries could provide an unpleasant shock to many businesses, especially if many
companies are not ready in a region with certain previous knowledge of taxation. Unlike
many organizations, Nakheel is now 100% ready to face the new VAT challenges and
deal with the governmental laws with confidence.
Nakheel will now get the benefits of seamless transparency between tax and finance.
They improved their tax process using a configurable task management and calendaring
framework that is integrated with finance systems. Azdan configures supplemental data
management tool that provides a centralized repository for manual input.
They get the benefits of best practice tax provision solution includes rich automation
features (e.g. calculating permanent/temporary differences from book data) and best
practice cbcr solution includes data collection, workflow, data automation, pre-built kpis
for audit flags.


WHY AZDAN RECOMMEND ORACLE
EPM CLOUD TAX REPORTING?
TAX AUTOMATION
Calculate permanent and temporary differences directly from the source financial data in
the general ledgers or from the financial consolidation system, significantly streamlining
your tax provision process.
TAX PROVISION CALCULATION
Calculate the tax provision from the lowest level of detail (legal entity) all the way up to
the consolidated tax disclosure, and generate the tax journal entries (addresses US
GAAP, IFRS, and statutory provision, including the "balance sheet approach").
SEAMLESS DATA AUTOMATION
Seamlessly populate the Country-by-Country Reporting (CbCR) template with data from
HFM, Oracle Financial Consolidation and Close Cloud (FCCS), or directly from ERP 3rd
party finance systems, providing complete transparency back to source financial
numbers.
DASHBOARDS AND ANALYSIS
Use dashboards that include prebuilt key performance indicators (KPIs) for typical audit
flags like "Revenue by Employee" and "Return on Equity." All data can be easily
discovered via standard Oracle reporting tools like Smart View and Hyperion Financial
Reporting.
TAX CALENDAR
Allow corporate tax to maintain important dates and workflow for key business
processes (e.g. audit management, tax provision, country-by-country reporting, tax
compliance, etc.) in a single, easy-to-use system.
NO MORE SPREADSHEETS
Completely automate processes that are typically based in spreadsheets using the tax
schedule capability. Data collection, calculation and analysis can all be automated,
including supporting work papers for tax provision, tax compliance, R&D Credit,
uncertain tax positions, and any tax data.
DASHBOARDS FOR TAX KEY PERFORMANCE INDICATORS
Utilize out-of-the-box dashboards with key performance indicators (KPIs), and create
custom dashboards for any tax metric.


WHY AZDAN IS THE BEST PARTNER TO
HELP YOU FACE YOUR CHALLENGES?
One Unified Solution. You can get the benefit of a totally unified solution, with seamless
upgrades and without many of the integration challenges. Our Specialization brings more
insight to our clients and become an integral part of their business. We have deep
experience in all Oracle products from strategy to execution in all vertical industries.
Robust Delivery Team. Azdan uses a proven methodology based on best practices
collected from our vast experience in deploying business solutions for our clients. To
successfully propose, design and deliver solutions on your behalf. They work with your
team hand in hand in time-efficient ways to develop solutions and deliver outcomes
rapidly.
Industry Specialty. Azdan recognize and understand the diversity of vertical market
such as Omnichannel commerce, Hardware, Internet/Software, Media, Manufacturing,
Fintech, Consumer mobile, logistics,…etc. Azdan fully understand your industry; its
trends, terminologies, regulatory and compliance challenges, business challenges and
other key attributes of the vertical environment.


DEEP IN-COUNTRY EXPERIENNCE
Localization. Our people are blend mix of business and technology Arab consultants.
They understand the culture of the manufacturing in the Arab countries. They have
several years of implementation and training experience on/offsite. Only Azdan has the
native perspective of your country, it has a deeply ingrained understanding of your
unique culture.
Customization. Azdan consultants use advanced customization tools to tailor NetSuite
to your individual business needs. These customization features allow you to easily
adapt NetSuite to meet your company's business process. They can control the
information that is accessed and entered by each user of your NetSuite accounts.
Support Model. Azdan support team offers your organization a choice of support
offerings to match your business needs, from critical to low severity incidents. Each
provides specific service levels and capabilities. Our Team has an efficient support
model flexible to perform on-site and off-site support. The support team is able to
address your NetSuite questions and issues rapidly to keep your business running
smoothly.


AZDAN BUSINESS ANALYTICS
Mazaya Business Avenue AA1, Office No. 2403
Jumeirah Lakes Towers, Dubai, United Arab Emirates
info@azdan.net
www.azdan.net
AREEN HADDADIN
Business Development Manager
areen.haddadin@azdan.net
+9715 26999 622
BISHOY SAMI
Managing Consultant
bishoy.sami@azdan.net
+9715 67159 627

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VAT implementation in GCC countries

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