What UAE Companies need to do to Prepare for VAT

While the UAE is preparing to introduce a new Corporate Tax and VAT, companies and firms are called to review numerous features including their financial systems in order to evaluate whether they are ready for the tax. Therefore, companies will have time to alter their financial and accounting systems.

While it is still early for companies to make major modifications to their business structures and manner they operate, there are multiple measures and matters they need to settle and reevaluate to make the transition from a tax-free environment to a tax environment as effective as possible.

everal of the measures companies must address and evaluate include the affect the introduction of tax will have on their business. These include reviewing the structure of the company to establish the cross-charges, evaluating contracts to appraise and review the company’s present tax clauses, analyze the company’s financial structure and system in order to evaluate whether they are ready to take on tax and finally reviewing the affect the tax will have on their operations and supply chain.

It is advisable that company’s keep updated on the tax developments and include the Corporate Tax and VAT in business plans. Internal communication and attentiveness is also important since the introduction of the VAT and Corporate Tax will influence other areas of a company like its legal, finance as well as its IT departments and business strategy.

Once the tax legislation has been introduced, companies will be called to prepare an implementation plan by the end of the first year. The purpose of the implementation plan is to check the company’s tax compliance and address matters that need to be fixed to become a tax compliant company. This procedure may entail hiring and training staff as well as developing appropriate resources.