GCC Unified Agreement VAT (UAVAT) 6 member state, GCC Framework - - PowerPoint PPT Presentation

▶
gcc unified agreement vat uavat
SMART_READER_LITE
LIVE PREVIEW

GCC Unified Agreement VAT (UAVAT) 6 member state, GCC Framework - - PowerPoint PPT Presentation

Nov 07, 2023 182 likes •449 views

Are you VAT ready ! VAT Readiness Presentation 8 Jul 2017 This presentation is intended for MCA Clients only, consent should be obtained from MCA prior to further circulation and distribution. GCC Unified Agreement VAT (UAVAT) 6 member state,

slide-1
SLIDE 1

8 Jul 2017

Are you VAT ready!

VAT Readiness Presentation

This presentation is intended for MCA Clients only, consent should be obtained from MCA prior to further circulation and distribution.

slide-2
SLIDE 2

GCC Unified Agreement VAT (UAVAT)

6 member state, GCC Framework available in public domain Minimum turnover $100k, optional $50k Uniform VAT rate 5% across GCC Choice of 1 Jan 2018 or 1 Jan 2019 Exemption or Zero rate – Education, Health, Real Estate and Local Transport Each country to draft own law within framework

Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

2

slide-3
SLIDE 3

GCC VAT update

GCC UAVAT published in Saudi Official Gazette – May 2017 KSA has circulated Draft VAT law for public consultation – May 2017 KSA GAZT has started the pre-registration of companies already on Ministry database – Jul 2017 News awaited from Oman, Bahrain and Kuwait

Clients Presentation – Jul 2017

3

slide-4
SLIDE 4

UAE VAT update

Federal Tax Authority (FTA) set up in UAE in Nov 2016

(Decision making, collection and compliance for taxes)

Draft Tax Procedures Law approved by UAE FNC

(Legal framework for regulation of taxes in UAE)

MOF VAT awareness session April onwards VAT Laws expected within 2 months

(VAT Law and Executive Legislation)

Clients Presentation – Jul 2017

4

slide-5
SLIDE 5

What is VAT?

VAT (Value Added Tax) is a form of indirect taxation – seller vis-a vis buyer VAT is a multipoint taxation VAT is payable on the value addition component VAT works on destination based taxation

Clients Presentation – Jul 2017

5

slide-6
SLIDE 6

How does VAT work?

Manufacturer Wholesaler Retailer SP – 100 Vat – 05 IP 105 Wholesaler SP – 200 Vat – 10 IP 210 SP – 300 Vat – 15 IP 315 VAT Payable = 5 Retailer VAT Payable: 10-5 (ITC)=5(NVP) Consumer VAT Payable: 15-10 (ITC)=5(NVP)

Clients Presentation – Jul 2017

6

slide-7
SLIDE 7

VAT Concepts

  • Taxable person - any person conducting economic

activity for purpose of generating income

  • Includes businesses registered outside GCC territory
  • Economic activity – continuous and regular supply,

comm, indl, agr and prof

  • Consideration is relevant, money or kind
  • Taxable Supply – Supply of goods and services for a

consideration

Key Definitions

Clients Presentation – Jul 2017

7

slide-8
SLIDE 8

Input Tax Credit

  • Credit for tax paid on taxable supplies
  • Facilitates value addition and avoid cascading effect
  • Allowed for taxable supplies
  • Exceptions – Exempt categories, non taxable supplies, negative

list (i.e ent, house for personal use)

General Concepts

  • Recipient - taxable person and registered
  • Correctly charged, claimable and evidenced
  • VAT has been paid or intended to be paid within 6 months
  • Entitled for refund on verification

GCC related

UAE and GCC related Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

8

slide-9
SLIDE 9

Date of Supply

Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

9

Date of Supply is Earlier of

Advance Receipt

OR

Delivery

  • f Goods

OR

Raising of Invoice In case invoice is raised within 14 days of delivery of goods, invoice date can be considered for VAT purpose

slide-10
SLIDE 10

Place of Supply rules

Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

10

Seller - Dxb Buyer - Shj Seller in Dubai will pay to UAE Tax Authority B2B Seller - Dxb B2B Buyer – Dammam B2B buyer in Dammam will pay on RCM basis to KSA Tax Authority B2C Seller - Dxb B2C Buyer – Dammam B2C seller in Dubai will pay to UAE Tax Authority subject to conditions

slide-11
SLIDE 11

Zero Rated Supplies

  • Output tax is zero rated
  • Input tax credit is allowed – no restrictions

General Concepts

  • Exports outside GCC
  • Food items as per GCC list
  • Medicine and Medical Equipment as per GCC list
  • Supply of sea, land and air means of transportation
  • Intl and Intra GCC transport and services
  • Charity organisations
  • Gold, silver and platinum – 99% and more purity
  • First supply after extraction of gold, silver and platinum

GCC Related

  • Health and Education
  • Residential real estate – first supply

UAE Related

UAE and GCC related Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

11

slide-12
SLIDE 12

Exempt Supplies

  • Supplies are exempt from tax
  • Restricted to local jurisdictions only
  • Defined sectors only
  • Input tax credit not available for exempt supplies

General Concepts

  • Financial services – Member states can choose to charge certain financial services
  • Imports of goods which are custom exempt
  • Local passenger transport
  • Bare Land

GCC related

  • Residential buildings other than zero rated
  • Some specific financial services – margin based

UAE Related

UAE and GCC related Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

12

slide-13
SLIDE 13

Import Export

  • Destination based taxation
  • B2B supplies – Dubai sales to Bahrain, Bahrain dealer to pay tax
  • B2C supplies – Supplier to pay tax in Dubai until turnover exceeds threshold limit in

Bahrain

  • In case of imports reexported within GCC, input tax credit to be reversed
  • Applicable only to member country which have introduced VAT

GCC import export

  • Receiver of goods and services pays the tax as supplier is not registered
  • Imports
  • Intra Community Supplies

Reverse Charge Mechanism (RCM)

  • GCC importer to reflect VAT and claim input tax credit
  • Exports outside GCC is zero rated

Outside GCC

Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

13

slide-14
SLIDE 14

VAT Registration

  • Mandatory when taxable supplies turnover exceeds US$ 100k, AED

375k

  • Optional where turnover exceeds US$ 50k, AED 187.5k
  • Optional – 3rd Qtr 2017, Mandatory – 4th Qtr 2017

Turnover threshold and dates

  • Includes Standard, zero rated, RCM based
  • Excludes Exempt supplies

Taxable Supplies

  • Related parties
  • Restricted to place of establishment in Member state only
  • Controls one or more business – 51% or more shareholding

Tax Groups

Source – UAE MOF Multiplier Event

Clients Presentation – Jul 2017

14

slide-15
SLIDE 15

Pending Matters

Source – UAE MOF Multiplier Event

Detailed VAT laws, executive legislations VAT refund for Tourists Regulations for Free Trade Zones

Clients Presentation – Jul 2017

15

slide-16
SLIDE 16

VAT Implementation

Clients Presentation – Jul 2017

16

slide-17
SLIDE 17

Why Bother Now! “It is essential that businesses try to understand

the implications

  • f

VAT now and

  • nce

the legislation is issued make every effort to align their business model to government reporting and compliance requirements”. Source: UAE Ministry of Finance VAT FAQ

Clients Presentation – Jul 2017

17

slide-18
SLIDE 18

Why Bother Now!

  • No past experience
  • Minimal documentation
  • No Audit requirement

Zero tax regime culture

  • Large companies will insist on VAT compliant suppliers
  • Pricing management
  • Liability for tax payment
  • Manage the cash flow timing difference
  • Proper system of recording and documentation to be in place

Business sustainability and profitability

  • Marketing and Sales
  • Procurement and Contracts
  • IT Systems
  • Finance and Legal

Organisation wide impact

Clients Presentation – Jul 2017

18

slide-19
SLIDE 19

Key Risks to Avoid

Not allow enough time to plan and implement Inadequate understanding of legislations and requirements System changes not reflecting organisational requirements Documentation requirements not properly mapped Control system not properly build for VAT accounting

Clients Presentation – Jul 2017

19

slide-20
SLIDE 20

About us

Specializing in the various fields of professional practice spread across 12 branches including Dubai. International Network Partner with US headquartered International audit network Established in the year 1984, MCA has a standing of 30+ years in the practice arena Well trained Staffs and Trainees

25 Partners 30+ Years Prime Global 500+

Dedicated in-house Research and Training team Established Clientele and an array of services

Research Clientele

Clients Presentation – Jul 2017

20

slide-21
SLIDE 21

Transaction

  • PE, M&A
  • Due diligence
  • Information Memorandum
  • Business valuation
  • Corporate Structuring
  • Inland, Free zone and offshore

incorporations

  • VAT Consultancy and support

Assurance

  • Statutory Audit
  • Internal Audit
  • Investigations
  • Fixed Assets count
  • Inventory count
  • Impairment assessment

Manuals, Policy & SOP Design

  • Accounting & Finance Manual
  • Operations Manual
  • Various SOPs
  • Credit Policy
  • Incentive/ Commission Schemes
  • Corporate Governance

Services

Corporate Finance

  • Project & Trade Finance

assistance

  • Receivables management
  • Payable management

Fixed Asset Management

  • Revamping FAR
  • Customized FAM Software
  • Mapping and value allocation
  • Identification of idle, damaged

and obsolete assets

  • Tracking technology

integration Costing

  • Activity based costing (ABC)
  • Costing review of all

processes

  • Lean management support
  • Benchmarking Study

Clients Presentation – Jul 2017

21

slide-22
SLIDE 22

How can MCA help

MCA

VAT Outsourced Impact Assessment Design Phase Execution Post VAT reviews

Clients Presentation – Jul 2017

22

slide-23
SLIDE 23

How can MCA help

  • Full support on VAT implementation
  • VAT return filing

Outsourced VAT

  • Review of business transaction and VAT implications
  • Assess system readiness and stakeholders readiness
  • Staff awareness programs

Impact Assessment

  • Transactions VAT planning and restructuring
  • Customer Management – pricing, credit terms and cashflows
  • Vendor coordination on VAT readiness
  • Designing system and process change requirements and specifications

Design Phase

  • System change testing
  • VAT computation controls

Execution

Clients Presentation – Jul 2017

23

slide-24
SLIDE 24

Contacts

Girish Chand Director MCA Consulting

402, Al Rostamani Tower “A” Sheikh Zayed road PO Box 3168, Dubai-UAE

T + 971 4 331 9501 F + 971 4 331 9502 W www.consultmca.in www.mca.co.in

Affiliate to:

Clients Presentation – Jul 2017

24

slide-25
SLIDE 25

THANK YOU

Clients Presentation – Jul 2017

25