Impact of VAT Compliance on Business Pierre Arman Market Lead for - PowerPoint PPT Presentation

Impact of VAT Compliance on Business Pierre Arman – Market Lead for Tax & Accounting – Thomson Reuters MENA Qatar Chamber of Commerce – February 2018

Agenda • Preparing for VAT in the GCC • Lessons learned in 2017 • Implementation Phase Critical Success Factors • Invoicing & VAT Determination • VAT Return Process • How technology can help?

Preparing for VAT in the GCC STEP 1 STEP 3 VAT IMPACT IMPLEMENTATION & ASSESSMENT TRAINING Understand and Review GCC Functional and QA Testing VAT Framework and individual country legislation User acceptance testing and roll out Review Business / Finance / Technology / Training for VAT VAT registration & review Define a VAT compliance Go Live planning roadmap 6-12 WEEKS 4-8 WEEKS 16-28 WEEKS 4-8 WEEKS STEP 4 STEP 2 GO-LIVE BLUEPRINT DESIGN BUILD & TEST Pilot run and reporting testing VAT submission Transaction Mapping exercise to identify the tax technology determination and reporting Hyper care requirements On-going VAT compliance monitoring Technology vendor selection Tax technology : - Requirements Gathering - Design - Build - Test

Preparing for VAT in the GCC – VAT readiness corporations STEP 1 STEP 3 VAT IMPACT IMPLEMENTATION & ASSESSMENT TRAINING Understand and Review GCC Functional and QA Testing VAT Framework and individual country legislation User acceptance testing and roll out Review Business / Finance / Technology / Training for VAT VAT registration & review Define a VAT compliance Go Live planning roadmap 6-12 WEEKS 4-8 WEEKS 16-28 WEEKS 4-8 WEEKS STEP 4 STEP 2 GO-LIVE BLUEPRINT DESIGN BUILD & TEST Pilot run and reporting testing VAT submission Transaction Mapping exercise to identify the tax technology determination and reporting Hyper care requirements On-going VAT compliance monitoring Technology vendor selection Tax technology : - Requirements Gathering - Design - Build - Test

Preparing for VAT in the GCC – VAT readiness financial institutions STEP 1 STEP 3 VAT IMPACT IMPLEMENTATION & ASSESSMENT TRAINING Understand and Review GCC Functional and QA Testing VAT Framework and individual country legislation User acceptance testing and roll out Review Business / Finance / Technology / Training for VAT VAT registration & review Define a VAT compliance Go Live planning roadmap 6-12 WEEKS 4-8 WEEKS 16-28 WEEKS 4-8 WEEKS STEP 4 STEP 2 GO-LIVE BLUEPRINT DESIGN BUILD & TEST Pilot run and reporting testing VAT submission Transaction Mapping exercise to identify the tax technology determination and reporting Hyper care requirements On-going VAT compliance monitoring Technology vendor selection Tax technology : - Requirements Gathering - Design - Build - Test

Agenda • Preparing for VAT in the GCC • Lessons learned in 2017 • Implementation Phase Critical Success Factors • Invoicing & VAT Determination • VAT Return Process • How technology can help?

Lessons learned in 2017- medium & large businesses in UAE and KSA 1. Only 10% of the organisations in UAE and KSA are in a position to be ready January 1st 2018 to include VAT on every invoice and prepare their VAT returns. 2. The 10% of businesses that are ready have one thing in common. They started a VAT impact assessment and implementation of a VAT framework to support the operations and I.T. 9 months+ before the January 1st 2018 deadline 3. A third of the remaining 90% either implemented a quick fix solution in the time they allowed, which will only support the business for a few months post January 1st 2018. 4. Two thirds of the remaining 90% were so late with their VAT preparations that they rushed through an RFP process with less than a month to go, desperately trying to get a Technology Partner to agree they can implement a compliant solution by January 1st 2018. The most common reasons CFO’s and CIO’s gave for a lack of action was the legislation was not due to be law for a 5. long time and because it is the Middle East, it may never be published. 6. All of them now wished they had been one of those 10% that took action 9-10 months before .

Getting ready

Impact assessment deliverables What are the VAT How complex is my supply compliance obligations for chain from a VAT my business? perspective? Where are my business VAT What VAT controls should be risks? embedded in my business 2. Operations / processes? Should I manage VAT 1. VAT VAT Policy and compliance internally, externally How do I best integrate VAT Compliance approach or both? compliance into my business processes? What organisational structure & resources should I employ? Which VAT treatments 4. Optimising 3. VAT & IT are apply to my VAT Systems business? compliance How do I set-up my IT systems for VAT? How can I best optimise my VAT What IT and business user compliance Policy, Operations and training is required? IT?

Understand your I.T. systems VAT capabilities Where implementing 3 rd party VAT Engines & VAT reporting software makes sense Ability to setup VAT in the I.T. systems • Build VAT logic in the • Build a in-house VAT HIGH ERP / I.T. systems. compliance function. • Outsource key VAT • Configure VAT logic in advisory processes and the ERP / I.T. systems. controls • Implement VAT auto • Outsource VAT returns software. compliance reporting • Outsource key VAT • Build a in-house VAT advisory processes and LOW compliance function. controls. • Implement a ‘Plug & Go’ • Implement a ‘Plug & Go’ tax engine for VAT. tax engine for VAT. • Implement VAT auto • Implement VAT auto returns software. returns software. LOW HIGH VAT knowledge in the business

Agenda • Preparing for VAT in the GCC • Lessons learned in 2017 • Implementation Phase Critical Success Factors • Invoicing & VAT Determination • VAT Return Process • How technology can help?

Implementation phase critical success factors • Involve key stakeholders from business and I.T. this is not just another finance reporting project, VAT impacts the whole business • Detailed transaction mapping • The value of using accelerated implementation tools

Providing I.T. with a meaningful VAT systems specification requires a transaction mapping exercise to be completed in step 2 – Blueprint design STEP 3 STEP 1 VAT IMPACT IMPLEMENTATION & ASSESSMENT – Deloitte TRAINING Understand and Review GCC Functional and QA Testing VAT Framework and individual country legislation User acceptance testing and roll out Review Business / Finance / Technology / Training for VAT VAT registration & review Define a VAT compliance Go Live planning roadmap 6-12 WEEKS 4-8 WEEKS 16-28 WEEKS 4-8 WEEKS STEP 4 STEP 2 GO-LIVE BLUEPRINT DESIGN BUILD & TEST Pilot run and reporting testing VAT submission Transaction Mapping exercise to identify the tax technology determination and reporting Hyper care requirements On-going VAT compliance monitoring Technology vendor selection Tax technology : - Requirements Gathering - Design - Build - Test

Supply chain Business process Requirements Configuration Tax models models scenarios Gathering Tool design assistance I -Tax model Tax model Supply chain Supply chain Requirements N Visio/Excel Visio/Excel Excel Excel Gathering Tool P -Business process -Business process U Worksheet Worksheet (RGT Tool) scenarios scenarios T A C Mapping of tax relevant Capture of tax results, T Mapping finished goods Preparation of tax models for inputs for each of the Assistance in either tax code invoice messaging, VAT I each finished product/service Supply chain models by business process scenarios; set-up in ERP or Tax Engine V reporting for each business product/service by legal entity ship from, ship to, supply set-up for VAT. I scenario location T Y - RGT Tool captures tax O results, invoice messaging, Preparation of business U Supply Chain Excel defining VAT reporting requirements Tax model Visio/Excel for process scenarios with tax T finished goods and services for each business scenario Design support as required P each finished good service relevant inputs to be supply chains and tax code assignment U captured in the RGT Tool - Summary table of tax code T rates with descriptions

Requirements gathering tool – GCC supply chain example

– Requirements gathering tool – VAT scenario sales example

BREAKING OUT EACH TAX DETERMINATION FIELD ON EVERY TRANSACTION LINE BY THE “WHAT”, “WHERE”, “HOW”, “WHO”, & “REPORTING” TO IDENTIFY THE CORRECT VAT CALCULATION & REPORTING TREATMENT PER TRANSACTION LINE

Agenda • Preparing for VAT in the GCC • Lessons learned in 2017 • Implementation Phase Critical Success Factors • Invoicing & VAT Determination • VAT Return Process • How technology can help?