Companies urged to gear up for VAT

Manama : Companies will need to upgrade their IT systems in-order to deal with Value Added Tax (VAT) when it is implemented, an expert has said.

Businesses will need to upgrade their accounting software when VAT is implemented, said T P Anand Senior Consultant at RSM in UAE.  He urged companies to upgrade their IT systems to be able to cope with the introduction of VAT. He said that it is not just the accounting department that will need to adapt, all departments of the company will have to be trained.

He was speaking to DT News on the sidelines of ‘VAT Alert Seminar’ organised by RSM Bahrain. The seminar briefed business owners and employees on how to cope with the changes brought by the implementation of VAT. 

“Employees across all departments of the company will need to be made aware about the changes brought about by VAT. Its implications are far reaching. You need to be proactive in training your staff and learning about the changes. Business need to study all there is to know about VAT,” he said.

“Implications of VAT reaches the IT side of the company because software systems will need to be updated. Most companies will be in favour of e-filing of returns so the IT systems should be capable of computing everything. If you are working on Microsoft Excel or a basic accounting software, you will now need to upgrade. On the commercial side, there are implications on so-many levels. Every company should gear themselves up and prepare and embrace this system,” he said. 

“All your inputs, whether it is raw materials or goods purchased or services that you have taken, has to be accounted for which means your entire system needs to be updated. You have to create that awareness among all your employees, not just the accounts departments. There needs to be a general awareness across the organization,” he said.

Initial VAT rate will be set at 5 per cent from 2018, unless a zero rate or exemption applies. Certain food item and activities such as healthcare social services local transport, and education will be exempt from VAT.