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Taxation

A CHANGE! VALUE ADDED TAX (VAT) IN GCC

A new entrant in GCC's business landscape, VAT brings about a wave of financial metamorphosis. Being well-equipped and prepared to welcome this change is the name of the game and need of the hour!

With most GCC countries announcing VAT implementation from next year, businesses are often alerted by the Ministry of Finance to prepare themselves adequately. To explain briefly, VAT is an indirect form of tax levied by Governments on the consumption of most goods and services. It is then collected by businesses from end consumers, on behalf of the Government.

Value added Tax (VAT)

How does VAT work?

  • With the introduction of VAT in GCC, all businesses with annual sales above a certain threshold (for instance in the UAE the threshold is set at AED 375,000 per annum) are required to register themselves with the tax authorities.

  • Once registered, businesses will have to charge VAT on the sale of goods and services, pay VAT on the purchase of goods and services and deposit the net amount with the government along with filing of a VAT return each quarter, subject to the provisions of VAT law.

  • Under VAT law, apart from the regular goods and services which follow normal VAT rules of collection, charge and payment, certain goods and services are categorized as either zero-rated or exempt which follow a different set of rules.

ProdigyWay International (PI) - your partner for all your VAT needs

ProdigyWay International (PI) is a financial solutions provider to businesses, working with them in the areas of accountancy, taxation, audit and advisory.

Under VAT services, PI offers businesses end-to-end solutions from providing guidance, assisting in preparedness and registration, maintaining appropriate VAT records, filing VAT returns to on-going monitoring of changing regulations and their impact on the business. Our UK and European trained VAT specialists with international experience and expertise are uniquely positioned to provide you with best-in-class services.

We provide expert advice and guidance, training and support tools and resolve complex issues to improve the quality of your financial reports. PI also functions as an extended workbench to develop the knowledge and expertise of your in-house finance function.

Registering for VAT

  • All businesses with revenues higher than the stated threshold need to be registered for VAT. Eligible businesses that do not register for VAT or implement VAT provisions for collection and payment of taxes, maintenance of proper books of accounts, and filing of VAT returns will be subjected to fines and penalties as prescribed in the VAT procedures law of the respective countries.

  • Business below the minimum threshold may register themselves. However, this remains voluntary.

Calculating & Reporting VAT

  • Every business registered for VAT is required to charge and remit the tax collected to the Tax Authority on a regular basis.

  • These Tax Agents are able to file returns at the end of every quarter following the end of the reporting period, on behalf of the businesses.

  • PI is your VAT partner in GCC, providing end-to-end VAT solutions for your business. PI is also a registered tax agent with the authorities, able to register your company with Tax Authorities and prepare and file VAT returns on your behalf.

Invoicing

Being a VAT- registered business, the company's invoices need to clearly indicate:

  • Tax Registration Number (TRN)

  • Amount of VAT charged on the transaction

It is therefore imperative for the businesses to ensure that VAT details are sufficiently and correctly mentioned on the supplier's invoices as well.

All invoices need to be retained for audit and reporting purposes.

What is the financial effect of VAT on your business?

  • Do you see VAT as an expense for your business? It may turn out to be one, if not managed correctly. Remember businesses only act as a conduit for collection of VAT from their customers and depositing it with the government, after deducting VAT paid on their purchases.

  • Proper VAT implementation and accounting measures in your company can ensure that you are not losing money. With professionals from ProdigyWay International, you can be assured that your books and VAT returns are managed with utmost care and diligence.

  • Our experienced VAT experts can even help you in determining the right pricing structure for your products and solutions to account for any adverse effect on your sales due to price increase.

Compliance and Preparation

At ProdigyWay International, we take pride in our proven ability to help clients develop optimum business and financial strategies, anticipate problems and take advantage of opportunities. We also understand that clients depend on our timely guidance and expertise for tax compliance and preparation.

  • Our expert teams comprise of specialists chosen for their particular industry and tax expertise, and include a level of hands-on partner involvement not found at larger firms.

  • We regard tax planning as a year-round activity and not something to be hastily addressed at the end of the financial year - we maintain an ongoing communication with clients regarding regulatory developments.

  • We have a proven track record of successfully representing our clients before Federal, State and local authorities.

Why is 'Tax Outsourcing' the answer...

  • Undertaking tax compliance and building a taxation function in-house is not the right step for every organization. It depends heavily on the industry, the size of the organization, its organizational structure and the cost the company is willing to bear.

  • To have effective tax compliance in-house requires the permanent hiring of taxation experts, which places significant financial burden on the company's resources - more so, in the situation where an enterprise has adopted a new tax strategy, has undergone a major transaction or when new laws have been introduced.

  • ProdigyWay International's Tax Outsourcing services will allow enterprises and businesses avoid this problem by relying upon our highly trained staff. By partnering with us, you can be rest assured that all VAT compliance and implementation measures are handled by experts, thus allowing you the time to concentrate on those elements which will actually help your business soar.

Tax Planning

When a business evolves, it faces challenges on multiple fronts and takes on different opportunities and needs. ProdigyWay International's tax planning experts work to align your business's growth aspirations with global tax regulations and obligations. Our optimum tax strategies for clients, include:

  • Cost saving: Although VAT is prima facie, a type of tax collected by businesses from customers to pay to the tax authorities, at times, due to the complex nature of transactions, a part of it can become the company's expense. At PI, through careful planning, we ensure that your company's cost burden is minimal in all circumstances.

  • Cashflow planning: There is always a gap in payment of taxes at the time of purchases and its collection at the time of sales. This places a burden on the working capital of an organization and at PI, we have strategies in place to ensure such adverse effects are kept to a minimum.

  • Workflow optimization: We can anticipate opportunities and risks associated with new business ventures, mergers and acquisitions, sales and internal expansions.

  • Smooth Tax Audits: VAT tax regimes involve random audits by government tax auditors which can be quite time-consuming and stressful and in the absence of proper guidance can lead to unnecessary financial burden. We have decades of experience in handling tax audits on behalf of our clients and in getting their books audited in the most effective and efficient manner.

International Tax

Businesses have now become more international than ever, thanks to a widespread and global customer base. A well laid-out and conceptualized tax strategy can help businesses align commercial goals with their operational and financial objectives. However, the rapidly changing business landscape with new emerging requirements, regulations and evolving standards for compliance has made optimal tax planning difficult.

You can count on the expertise of ProdigyWay International's tax accountants and specialists who will be an integral part of your planning. We will assist you in developing a global tax strategy, bringing you insight on how organizations globally are evolving and developing in an increasingly borderless world.

PI's tax specialists track and monitor the ever-changing environment constantly, to ensure we are on top of industry nuances and well-placed to provide the right advice to help our clients progress financially.

Our services include:

  • International mergers and acquisitions and cross-border expansion: We help you identify all relevant tax implications when organizations are contemplating cross-border transactions or expanding to new global markets.

  • Foreign tax credit planning: We enable businesses to receive maximum tax credits for foreign tax payments and help oversee compliance.

  • International research on transfer pricing: We assist with identifying and minimizing transfer pricing risks and prepare reports that comply and conform with documents and its requirements.