The value-added tax (VAT) is due to make foray in Gulf Cooperation Council (GCC) from January next, but majority of businesses in the region are not yet ready to implement the new consumption tax, according to latest report by Deloitte.
Read more: Lack Of Legislation Risks Delay Of GCC VAT Implementation
The consultancy, which conducted an Indirect Tax Client Survey, pointed out that 69 percent of GCC businesses expressed concerned that they may not be prepared for VAT introduction in January 2018.
The Deloitte survey was completed by businesses spanning all industry sectors, giving a true reflection of the opinions of the business community as a whole.
About 71 percent of the manufacturing industry respondents thought they would need the help of VAT specialists, whereas 52 percent of the energy, resources and utilities respondents thought specialist advice would not be needed.
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"Whilst 96 percent of respondents confirmed they were aware that VAT is going to be introduced in the GCC, less than half believe that VAT will be introduced in the very near future," said Justin Whitehouse, Deloitte Middle East Indirect Tax expert.
He said this belief amongst the business population is directly contradicted by official announcements and positive actions being taken by the Governments of the GCC States, such as official announcements by the General Authority for Zakat and Tax (GAZT) in the Kingdom of Saudi Arabia and the launch of a series of public awareness sessions by the Ministry of Finance in the UAE.
"These actions indicate that all is on track for the target implementation date of 1 January 2018 and businesses should be taking their preparations seriously by this point," he said.
A parallel survey was conducted by Deloitte among clients of Deloitte Malaysia, entitled The Journey to Malaysian Goods and Services Tax (GST), so as to offer insights from businesses that have very recently been through a GST implementation process.
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To compare with their Malaysian counterparts, 69 percent of the GCC respondents estimated it would take longer than six months for their business to adequately prepare for the introduction of VAT although 30.91 percent thought it would take their business less than six months to get ready, which contrasts significantly with the Journey to Malaysian GST survey, in which only 10 percent of respondents needed less than six months to prepare.
Almost 70 percent of respondents to the Journey to Malaysian GST survey who exceeded budgets for their implementation project confirmed that the principle reason consisted of issues with the IT system.
"There is a great deal to be done for every business to be able to achieve day one compliance. We hope these results provide some interesting food for thought on the commencement of implementation journey," concluded Whitehouse.
