benefits of voluntary registration especially for small businesses
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

VAT in the GCC:

Benefits of voluntary registration, especially for small businesses

Arab Today, arab today

Arab Today, arab today Benefits of voluntary registration, especially for small businesses

the Gulf Cooperation Council (GCC) group
London - Arab Today

From 1 January 2018, any business operating in the Gulf Cooperation Council (GCC) group of nations that earns revenue of Dhs 375,000 or more, will be legally required to register as a value-added tax (VAT) vendor.

The new VAT law has come as a shock to many businesses – especially small enterprises – who are accustomed to operating in a low-tax environment. With falling oil prices and increasing global competition, GCC countries need to diversify their economies and find new revenue streams if they want to remain competitive.

Start-up and small businesses whose revenue does not match the threshold are probably breathing a collective sigh of relief. While collecting tax on behalf of the government should not be seen as a cost to the business, there are implications in terms of processes, systems and people that could incur some expenses, so it makes sense that they would avoid compliance for as long as legally possible.

But there’s a case to be made for voluntary VAT registration, and if your business records revenue of 50% of the threshold, you can put your hand up to become a voluntary VAT vendor.

Here are a few good reasons to do that:

 Forward planning. As your business scales, you might not notice when your revenue crosses the threshold for mandatory compliance. If this happens, and you’re not registered as a VAT vendor, you could be liable for penalties of a minimum of Dhs 500 and up to five times the amount of VAT that would have been payable for the period in question. By the time you do reach the threshold, VAT processes will be entrenched in your business, which is one less thing to worry about.
 Business and cash flow security. Medium-sized and large businesses that are legally required to register as VAT vendors will require VAT invoices from their suppliers in order to comply with stringent record-keeping requirements. Because of this, they may decide not to transact with businesses that are not VAT registered so that they can streamline their reporting processes. Voluntarily registering as a VAT vendor secures your place in the supply chain and contributes to a healthy cash flow.
 Perception. Businesses that are registered as VAT vendors may be perceived as being more professional and therefore more appealing to partners.
 Refunds. If the goods or services you supply are zero-rated, you could qualify for a tax refund at the end of the reporting period. Zero-rated industries include education, healthcare, transportation, property and real estate, oil and gas, and precious minerals. The law stipulates different exemptions for each of these sectors.
 Upskilling. There’s a definitive learning curve involved with becoming a VAT vendor. By upskilling your team before you are legally required to collect tax, you not only future-proof your business but also empower your team with new knowledge and skills, giving them an opportunity to familiarise themselves with the processes and requirements of compliance.
 Systems upgrade. To stay on top of the stringent record-keeping requirements of the new VAT law, you’ll need a robust accounting solution that not only automates processes like VAT invoice and credit note production, but that also keeps a record of all transactions for reporting purposes. It can take between nine and 12 months to fully prepare your systems for VAT, so the earlier you start, the lower the risk of incurring penalties.
Small businesses might be tempted to put off VAT registration for as long as possible, but if you have ambitious growth plans, sooner or later, you will have to comply. By partnering with a trusted and experienced business partner like Sage, you can ease into compliance and proactively get your systems, processes and skills in order before the taxman comes knocking.

VAT is nothing new and nothing to fear. It will take some adjustment and learning, but the additional revenue flowing into GCC nations will go a long way to maintaining effective public services and positioning GCC countries as globally competitive nations with truly diversified economies.

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benefits of voluntary registration especially for small businesses benefits of voluntary registration especially for small businesses

 



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benefits of voluntary registration especially for small businesses benefits of voluntary registration especially for small businesses

 



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