With the advent of Value Added Tax across the Middle East, with implementation now started in Saudi Arabia, the UAE, Bahrain and elsewhere, many firms are still wondering how to ensure compliance with all the requirements of the law in the Gulf. What is not clear, is the extent to which submitted financials will be scrutinized and checked by Tax authorities in the coming years. Most tax authorities have appointed auditors, and do require the submission of VAT reports by companies which are required to pay VAT. There are also strict financial penalties for failing to comply with the VAT laws, and the accounting requirements. Most Limited Liability companies in Bahrain and the UAE are also required to submit audited financials to the Ministry of Commerce on an annual bases as well.

In light of these challenges, there have been a number of highly qualified consulting, legal and audit firms, offering services throughout the GCC to help large companies stay on top of their books and ensure compliance with the VAT implementation. These firms have filled the knowledge gap with experts from other jurisdictions who have extensive tax knowledge and experience with Tax compliance in regions where taxation is the norm.

However, for smaller to medium sized businesses, which may not be able to afford the luxury of these seasoned experts-there could be a greater degree of risk in terms of liability exposure for non-compliance with VAT laws, without the assistance of expertise. Luckily, there are a number of software companies who have learned from the last year of VAT implementation in Saudi Arabia and the UAE, and who have now developed systems to generate instant and real time VAT reports. These systems can be surprisingly easy to use, and with consistent entries, VAT reports can be generated instantaneously, with complete cross referencing to various invoices and receipts. In addition, as such software would be based on actual VAT accounting requirements and practices, oftentimes, the use of IT does ensure automated compliance with the VAT regime. Some training and input may be required to ensure adequate usage, however, for smaller businesses with less complex operations, or lower scale transactions, the software package may offer a complete solution.

One such software provider we work with is Zoho Books. Zoho books offers cost effective, easy to use and very effective VAT and accounting software. The software is cloud based, and has been calibrated to prepare automated reports which are compliant with the VAT requirements in the GCC. All the information is also stored on a cloud based system, and therefore, risk of deletion or loss is also minimized. Once the firm begins using the software diligently, the difficulty of submitting VAT reports and complying with the VAT requirements is greatly reduced. We have worked with a number of clients this year to set up these cost effective software solutions, which can start from as little as BHD 10/AED 100 per month.

In a competitive and volatile global market, we believe more cost effective solutions are required. For small and medium sized businesses, long sessions with accountants and auditors may not be required or even desired. Therefore, we offer cheap and effective software implementation to smaller businesses, to assist them in minimizing their tax liability. We offer software setup and registration, either together or individually, and rates can be as low as BHD 10/ AED 100 per month.

For those businesses who do want to actively comply with and minimize their tax risk, but don’t know where to start, get in touch with us at zakir@infinigence.net. We will be happy to help.

GCC VAT Laws Made Easy with IT