Businesses urged to seek expert help for VAT implementation

With only a little over two months remaining for VAT implementation, taking help from tax experts may be necessary for medium and large enterprises who are yet to start VAT implementation, according to a leading tax expert. It may not be late for medium and large enterprises to start a full implementation of VAT on their own, if they have developed a robust implementation plan, said Abhishek Jajoo, Managing Partner and CEO, AJMS International Management Consultancy.

According to Mr Jajoo, “Businesses must set up a Steering Committee/Project Coordination Committee comprising representatives from Finance, Supply Chain, IT, HR and Marketing Departments as part of the implementation process.” “If the knowledge is not available in-house, businesses may seek third-party expert support. This is to identify gaps, assess the impact of VAT on cash-flow, pricing, and profitability including transition issues, Contracts and Transactions review for proper VAT treatment, IT migration for generating Tax Invoice, proper VAT Accounting, and VAT Return filing preparation, Recordkeeping and other documentation among others,” he said.

Small businesses also need to take urgent steps to prepare for VAT. “In reality, small enterprises have to take a business call on implementing VAT in its true spirit and content. Many readymade, off-the-shelf VAT-enabled accounting packages are available. They just need to zero-down on one and get going with it. Training is required without a doubt. But no amount of training, light-reading of VAT Law or a course on VAT would be totally helpful considering the short-time at hand before VAT Law becomes effective. The law is expected to be implemented from 1st January 2019,” said Hemant Mundhra, Director, Indirect Taxation at AJMS International Management Consultancy.

On the lessons learned from VAT implementation in neighbouring countries, he said, “Bahrain is blessed to have its two neighbouring countries successfully implemented VAT in record time. Teething issues in implementation of VAT are known around. First and foremost, a business must orient, educate and train its employees about basics of VAT implementation. Be it VAT Treatment of its transactions, Transition issues, generation of Tax Invoice, preparedness for VAT Return filing and importance of Recordkeeping and documentation.

Communicate with customers and suppliers about chargeability of VAT and impending changes to contracts and agreements’ terms is of paramount importance.” Giving a broader economic analysis, Muhammad Zubair, Director, Business Advisory at AJMS International Management Consultancy, said that people may not necessarily spend less as a result of VAT. He said, “Let’s look at it this in a positive way. Any major economic change makes people sit back and take a closer look at their decisions and actions. Implementation of VAT in Bahrain is one of the major economic changes.

People may not spend less but they will spend judiciously, weighing their options and priorities.” Explaining how tax experts can help businesses, Ram Prasad, Partner at AJMS International Management Consultancy, said, “We are exactly aware of challenges in VAT laws and its implications and interpretations. Our major strength lies in having a pool of resources drawn from various industry segments, which have implemented VAT in other parts of the world including the KSA and the UAE.

“We don’t have to go through trial and error method for implementing VAT. We study every client’s businesses at depth, their legal structure, contracts, transactions, business processes, system process and analyse the impact of VAT on various model in respective VAT implementation process. “In addition, we train the key resources of the business to be superuser of VAT law requirements and get them ready to issue its first Tax Invoice and file its first VAT Return.”