With the impending VAT rollout in the UAE in just under seven months, there's much to discuss about how technology could support businesses, revenue officials and taxpayers.

Crowe Horwath has been running a series of VAT workshops, and while the previous masterclass focused on the basic principles of VAT implementation, today's seminar tackled some of the practical issues in its implementation the design and operation of VAT – based on the GCC VAT Framework Agreement -, the IT aspect as well as legal risks.

There are two ways in which technology affects VAT. The first is how taxpayers can apply technology to help calculate the tax due and file the necessary returns. The second is how technology can support revenue authorities in collecting the tax and auditing.

Our workshops have also sought to dispel fears that VAT would be an insurmountable administrative and compliance burden for UAE businesses. It's important to note that technological solutions won't make compliance burdens disappear, but they could significantly ease the process.

In the same vein, it is expected the implementation of the VAT will bring new risks to businesses. Therefore, it is essential for the finance team to understand exactly whether their business is exposed to any VAT based risks.

The following rule is key: the more complex the VAT supply chain, the higher the tax risk. If the VAT rules are not applied properly, your company may be at risk of incurring high fines for non-compliance and being charged turnover based penalties for incorrect appliance of the 5% rate.

Our forthcoming workshops - scheduled to commence after Ramadan and Eid holidays - will cover the more problematic aspects of VAT, such as rate differentiation and exemptions, the scope for non-compliance, and difficulties applying VAT in the context of cross-border trade across the GCC.

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