Page 16 - Internal Auditor Middle East - December 2017

Internal Audit

By: Ashraf Masa’deh Edited By: Menakshi Razdan
VAT! HOW

INTERNAL AUDIT

CAN HELP

OVERVIEW ers with an objective assurance on the
By now, majority of the audit community adequacy and effectiveness of the internal GCC AND LOCAL
is already aware that UAE, as well as other controls and governance arrangements VAT REGULATIONS
GCC countries will start implementing implemented in the project.
Value Added Tax (VAT) effective 1st of VAT will be governed by a unified
January, 2018. Rest of the GCC countries “Lack of VAT readiness agreement at GCC level, as well as by
will follow by January 2019. A Federal local laws and regulations. The unified
Tax Authority (FTA) has been established exposes businesses agreement outlines the framework under
to govern, manage the implementation which VAT can be implemented in each
process, collect federal taxes and apply the to a new set of of the GCC member states and defines
tax-related procedures. The VAT proce- the principles on how to treat other
dures are defined in the Tax Procedures inherent risks that GCC countries.
Law, which has been approved recently.
Two sets of administrative and tax evasion need to be managed VAT in the UAE will be regulated by
penalties have been defined in the Tax both Federal Law No. 8 of 2017 on VAT
Procedure Law. by implementing a and the landmark Federal Law No. (7) of
Although VAT will come into effect in less proper tax strategy 2017 for Tax Procedures. Tax Procedures
than four months, recent surveys con- Law sets the foundation for the tax
ducted by professional firms concluded and compliance system and regulates the administration
that GCC businesses are not yet prepared and collection of taxes by the FTA. The
for VAT. Lack of VAT readiness exposes framework.” regulations define the VAT rates (5% and
businesses to a new set of inherent risks zero) , the goods and services subject
that need to be managed by implement-
ing a proper tax strategy and compliance WHY IT IS IMPORTANT TO GET IT to VAT and exemptions, importation,
framework. RIGHT THE FIRST TIME the right of deducting input VAT and
refunds, place of supply, VAT registra-
Internal Auditors, as integral part of the Starting from the 1st of January, 2018, enti- tion and payment, due dates, VAT return
governance framework of the business, are ties in the UAE will be required to collect,
expected to add value to the VAT readi- record, and pay the due VAT to the FTA. filing, and VAT invoice and record reten-
ness project by providing their sharehold- Registration with FTA will be opened in tion requirements.

14 INTERNAL AUDITOR - MIDDLE EAST DECEMBER 2017