Value Added Tax (VAT) hitting Qatar soon!

242

Possibility of implementing Value Added Tax (VAT) in Qatar from as early as January 1, 2018, a senior finance professional said.

The starting rate for VAT is likely to be 5% and if a similar pattern is followed as with other countries that have implemented VAT the rate will increase over time, he said.

As an example, VAT was introduced in the UK in 1973 at a rate of 10% and the VAT rate in the UK is now 20%.

Read: Selective tax in Qatar on “harmful” goods, luxury items

A framework agreement on VAT was signed by the six GCC member states in Saudi Arabia in the first week of February.

Gavin Brown, managing partner, BDO Public Accountants Qatar, said that this was a key move by the six countries that demonstrated their commitment to implement VAT.

“The introduction of VAT in Qatar will be a leap in the dark for many businesses if they do not lay the groundwork for it now,” Brown said.

The new indirect tax will represent an important new source of revenue for Qatar and will be another action to move away from the economy being oil dependent, he said.

He said, “The effects of the indirect tax will have a far-reaching impact on both consumers and businesses. Qatar would no longer be a tax-free shopping destination and retailers will be obligated to charge customers the new tax.”

Brown said businesses will need to upgrade their financial systems to account for VAT and ensure that they are charging the right amount.

They will also have to record the amount they are required to pass over to the tax authorities, and indeed, how much should be reclaimed.

In case you missed it:   Nepali couple becomes successful business entrepreneurs in Qatar

Systems will need to be in place to prevent the risk of fraud — as European businesses and tax-collecting bodies know only too well, VAT is a tempting target for potential fraudsters.

“Business leaders should start to take steps to ensure that they are ready for the tax in Qatar. As a first step, they should understand the VAT framework and legislation when it is published.

Then an IT specialist should be consulted with a view to upgrade their technology and related requirements. A review of the associated training needed to use the financial software should also be undertaken at this time,” Brown said.

Internal governance processes should be strengthened and an external/internal VAT adviser should be appointed to ensure robust compliance.

Once the VAT legislation is issued, the VAT registration process should be started as early as possible and staff within the organization will need to be aware of the changes and how they will be affected, he said.

Ivor Feerick, chair, VAT Centre of Excellence (BDO International), said, “Sensible, prudent advance thinking of the opportunities and impact of systems changes will be recompensed with a reduced risk of penalties from non-compliance and a seamless implementation of the new tax”. (GulfTimes)

LEAVE A REPLY