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ISYX VAT Solution – GCC VAT
Readiness Plan
Sandeep Mahindra
What is VAT for GCC ?
CONFIDENTIAL @ Copyright 2016. All rights reserved
• VAT is an indirect tax applied on the consumpti...
CONFIDENTIAL @ Copyright 2016. All rights reserved
VAT | How it Work ?
Key Features – VAT GCC Framework
CONFIDENTIAL @ Copyright 2016. All rights reserved
• The standard VAT rate will be 5% unl...
VAT Transaction Types
CONFIDENTIAL @ Copyright 2016. All rights reserved
CONFIDENTIAL @ Copyright 2016. All rights reserved
Transaction Type & Treatment
VAT Authority Expectation from Business
CONFIDENTIAL @ Copyright 2016. All rights reserved
• Registration: Mandatory regis...
VAT Risks Example : KSA Govt. Announcement
CONFIDENTIAL @ Copyright 2016. All rights reserved
Business Challenges – GCC VAT
CONFIDENTIAL @ Copyright 2016. All rights reserved
Pressure from the authorities for Legal C...
IT Challenges – GCC VAT
CONFIDENTIAL @ Copyright 2016. All rights reserved
Need to deliver a standardized approach to supp...
VAT Compliance - Challenges
CONFIDENTIAL @ Copyright 2016. All rights reserved
■Inaccurate & delayed VAT returns can attra...
Standard Supply – VAT 5%
CONFIDENTIAL @ Copyright 2016. All rights reserved
1 4Supplier
UAE
VAT
VAT
Import of Goods
Local ...
Zero Rated Supply – VAT 0%
CONFIDENTIAL @ Copyright 2016. All rights reserved
Africa
Customer
Export AED 2000
+Output VAT@...
Exempted Rated Supply – VAT Exempted
CONFIDENTIAL @ Copyright 2016. All rights reserved
1 4Supplier
UAE
VAT
No VAT
Import ...
RCM – Reverse Charge Mechanism - Sample
CONFIDENTIAL @ Copyright 2016. All rights reserved
1 4Supplier
UAE
VAT
VAT
Import ...
RCM – Exempted Business
CONFIDENTIAL @ Copyright 2016. All rights reserved
No credit allowed
* VAT to be paid under RCM
(N...
CONFIDENTIAL @ Copyright 2016. All rights reserved
OutsideGCC UAE
Full credit
allowed
* VAT to be paid under RCM
(Full cre...
CONFIDENTIAL @ Copyright 2016. All rights reserved
VATInvoiceTemplate
Cash Flow - Sample
CONFIDENTIAL @ Copyright 2016. All rights reserved
2018
20/8/18
Aug
15/9/18
Sep Oct Nov
Purchases made
...
CONFIDENTIAL @ Copyright 2016. All rights reserved
Particulars Amount
Purchase Account / Service (Expense) Dr. (Value of P...
CONFIDENTIAL @ Copyright 2016. All rights reservedCONFIDENTIAL @ Copyright 2016. All rights reserved
VATReturnsCalculation
ISYX VAT Offerings - Options
CONFIDENTIAL @ Copyright 2016. All rights reserved
• Option – 1 | ISYX VAT Solution on cloud ...
Taxable statuses
What is the taxable supply?
Place of supply?
4 Is there an Exemption?
Who is liable?
1
2
3
5
VAT Obligati...
GCC VAT Engine
CONFIDENTIAL @ Copyright 2016. All rights reserved
Engine
VAT legislation
Updates
Invoice
Facts
addresses
g...
GCC VAT Engine
CONFIDENTIAL @ Copyright 2016. All rights reserved
Fact
3…
Fact
2
Fact
1
VAT
Calculation
Legislation
VIES
C...
GCC VAT Reporting
CONFIDENTIAL @ Copyright 2016. All rights reserved
Reporting
Check
Validation
Oversight and
review
INBOX...
GCC VAT Reporting
CONFIDENTIAL @ Copyright 2016. All rights reserved
ISYX
VAT Reporting
Data collection
SAP, Oracle
connec...
CONFIDENTIAL @ Copyright 2016. All rights reserved
SAP VAT Computation – TAAS | Tax Service
SAP VAT Compliance at a Glance
CONFIDENTIAL @ Copyright 2016. All rights reserved
VAT Computation – TAAS | Tax Service
CONFIDENTIAL @ Copyright 2016. All rights reserved
SAP VAT – Localization – Template & Notes
CONFIDENTIAL @ Copyright 2016. All rights reserved
Microsoft Excel
Worksheet
Pil...
ISYX’s VAT Service Categories - a 4 Pillar Approach
CONFIDENTIAL @ Copyright 2016. All rights reserved
We are actively eng...
GCC VAT Implementation Phase - Approach
CONFIDENTIAL @ Copyright 2016. All rights reserved
Question and Answers
CONFIDENTIAL @ Copyright 2016. All rights reserved
Sandeep	Mahindra
+971-523261715
CONFIDENTIAL @ Copyright 2016. All rights reserved
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GCC VAT Solution Presentation

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The standard VAT rate will be 5% unless a zero rate or exemption applies.
The Member States have the right to subject the following sectors to a zero rate or to exempt them from VAT:
Education
Health
Real estate
Local transport
The Member States have the right to subject the oil sector, petroleum derivatives, and gas to a zero rate of VAT.
Individual GCC countries have the right to subject certain food products to a zero rate of VAT.
The Member States have the right to subject medical supplies to a zero rate of VAT.
Intra-GCC and international transport will be subject to a zero rate of VAT.
The export of goods to jurisdictions outside of the GCC Member States will be subject to a zero rate of VAT.
The Member States have the right to exempt Financial Services from VAT. The term financial services is not defined but broadly the exemption will generally relate to dealings in money, securities, foreign exchange and the operation and management of loan accounts, deposits, trade credit facilities and related intermediary services. The exemption is not expected to extend to fee based services transacted by a financial institution. However, Member States may choose to apply different VAT treatments to financial services if they wish.
Supplies of goods and services from a VAT registered person in one Member State to a VAT registered person in another Member State are subject to the reverse charge mechanism.
VAT grouping appears to be permitted between two or more legal persons resident in the same Member State.
The treatment of GCC free zones is not addressed and it is left to each Member State to determine its own VAT treatment for free zones.
Businesses with an annual revenue of over AED 375,000 will be required to register for VAT purposes.
Businesses with an annual revenue between AED 187,500 and AED 375,000 will have the option to register for VAT purposes.

Publicada em: Serviços

GCC VAT Solution Presentation

  1. 1. ISYX VAT Solution – GCC VAT Readiness Plan Sandeep Mahindra
  2. 2. What is VAT for GCC ? CONFIDENTIAL @ Copyright 2016. All rights reserved • VAT is an indirect tax applied on the consumption of most goods and services. VAT is levied by VAT registered businesses that supply goods and services in the course or furtherance of their business. VAT is also applicable on the import of goods. • VAT is levied at each stage in the supply chain and is collected by businesses on behalf of the government. • VAT is ultimately incurred and paid by the end consumer.
  3. 3. CONFIDENTIAL @ Copyright 2016. All rights reserved VAT | How it Work ?
  4. 4. Key Features – VAT GCC Framework CONFIDENTIAL @ Copyright 2016. All rights reserved • The standard VAT rate will be 5% unless a zero rate or exemption applies. • The Member States have the right to subject the following sectors to a zero rate or to exempt them from VAT: • Education • Health • Real estate • Local transport • The Member States have the right to subject the oil sector, petroleum derivatives, and gas to a zero rate of VAT. • Individual GCC countries have the right to subject certain food products to a zero rate of VAT. • The Member States have the right to subject medical supplies to a zero rate of VAT. • Intra-GCC and international transport will be subject to a zero rate of VAT. • The export of goods to jurisdictions outside of the GCC Member States will be subject to a zero rate of VAT. • The Member States have the right to exempt Financial Services from VAT. The term financial services is not defined but broadly the exemption will generally relate to dealings in money, securities, foreign exchange and the operation and management of loan accounts, deposits, trade credit facilities and related intermediary services. The exemption is not expected to extend to fee based services transacted by a financial institution. However, Member States may choose to apply different VAT treatments to financial services if they wish. • Supplies of goods and services from a VAT registered person in one Member State to a VAT registered person in another Member State are subject to the reverse charge mechanism. • VAT grouping appears to be permitted between two or more legal persons resident in the same Member State. • The treatment of GCC free zones is not addressed and it is left to each Member State to determine its own VAT treatment for free zones. • Businesses with an annual revenue of over AED 375,000 will be required to register for VAT purposes. • Businesses with an annual revenue between AED 187,500 and AED 375,000 will have the option to register for VAT purposes.
  5. 5. VAT Transaction Types CONFIDENTIAL @ Copyright 2016. All rights reserved
  6. 6. CONFIDENTIAL @ Copyright 2016. All rights reserved Transaction Type & Treatment
  7. 7. VAT Authority Expectation from Business CONFIDENTIAL @ Copyright 2016. All rights reserved • Registration: Mandatory registration for VAT for all businesses exceeding a specific VAT registration threshold. In simple terms, only businesses that meet a certain minimum annual turnover requirement will have to register for VAT. • Submission of Legal Reports: • Filing of periodic VAT returns with the tax authorities (either monthly or quarterly) • Remitting any VAT payable by a specified date. • Record keeping: For all business transactions: • Tax invoices • Debit or credit notes • Import and export records • Records of goods/services provided for free or allocated for private use • Zero rated or VAT exempt supplies and purchases • e-Invoice: Copy of all customer invoices to be replicated at government system (expected to be future requirements)
  8. 8. VAT Risks Example : KSA Govt. Announcement CONFIDENTIAL @ Copyright 2016. All rights reserved
  9. 9. Business Challenges – GCC VAT CONFIDENTIAL @ Copyright 2016. All rights reserved Pressure from the authorities for Legal Compliance / Penalties on late submission and incorrect reporting / Demand for accurate VAT reporting Deadlines for submitting VAT returns /Cash Management & Tax Liability Impacts entire sales and purchase transactions and resultant Data Integrity / Master Data changes and validations Complex rules (e.g. Cross-border services, Transition Rules, mixed supply) Industry specific VAT requirements
  10. 10. IT Challenges – GCC VAT CONFIDENTIAL @ Copyright 2016. All rights reserved Need to deliver a standardized approach to supporting VAT for ERP users with low TCI to drive business continuity Consistent upgrade path for VAT functionality Total Cost of Development for custom VAT applications, Forms and Reports increase the overall TCO Maximized use of standard ERP functionality A solution aligned with the long-term direction of ERP products High pressure from government to ascertain compliance versus high effort , restricted time line and limited budget
  11. 11. VAT Compliance - Challenges CONFIDENTIAL @ Copyright 2016. All rights reserved ■Inaccurate & delayed VAT returns can attract penalty ■Complex rules to manage special conditions ■Interfaces and ERP customizations may pose additional challenges for VAT enablement ■Impacts entire supply chain and related financial accounting ■Regression testing of ERP and all connected systems ■Managing transition scenarios such as Taxable Goods / Services Sold Before 1 January 2018 and Returned On Or After 1 January 2018 ■Sub optimal implementation of VAT can even result in cash flow issues for organization
  12. 12. Standard Supply – VAT 5% CONFIDENTIAL @ Copyright 2016. All rights reserved 1 4Supplier UAE VAT VAT Import of Goods Local purchases Full credit allowed Cost Customer Import VAT India Sale Procurement of Services Customs duty Service Provider Supplier VAT 3 ABC 2 Value AED 1000 + Customs Duty@5% AED 50 AED 52.5 AED 1102.5 + Import VAT@5% Total Value + Input VAT@5% Total AED 500 AED 25 AED 525 Value + Input VAT@5% Total AED 100 AED 5 AED 105 Sales +Output VAT@5% Total AED 2000 AED 100 AED 2100 Month/Quarter end position Amount Output VAT (Total VAT collectedon Sales) 100 (A) Input VAT (Input VAT 52.5 + 25 + 5) 82.5 (B) Net VAT Payable 17.5 (A-B)
  13. 13. Zero Rated Supply – VAT 0% CONFIDENTIAL @ Copyright 2016. All rights reserved Africa Customer Export AED 2000 +Output VAT@0% AED 0 Total AED 2000 Full credit allowed 1 4Supplier UAE VAT VAT 0% Import of Goods Local purchases Cost Customer Import VAT India Export Procurement of Services Customs duty Service Provider Supplier VAT 3 ABC 2 Value AED 1000 + Customs Duty@5% AED 50 AED 52.5 AED 1102.5 + Import VAT@5% Total Value + Input VAT@5% Total AED 500 AED 25 AED 525 Value + Input VAT@5% Total AED 100 AED 5 AED 105 Month/ Quarter End position Amount Output VAT (Total VAT collectedon Sales) 0 (A) Input VAT (Input VAT 52.5 + 25 + 5) 82.5 (B) Net VAT Refundable 82.5 (A-B)
  14. 14. Exempted Rated Supply – VAT Exempted CONFIDENTIAL @ Copyright 2016. All rights reserved 1 4Supplier UAE VAT No VAT Import of Goods Local purchases Cost Customer Import VAT India Sale Procurement of Services Customs duty Service Provider Supplier VAT 3 ABC 2 Value AED 1000 + Customs Duty@5% AED 50 AED 52.5 AED 1102.5 + Import VAT Total Value + VAT@5% Total AED 500 AED 25 AED 525 Value VAT@5% Total AED 100 AED 5 AED 105 Sale Total AED 2000 AED 2000 Month/ Quarter End position Amount Output VAT (Total VAT collectedon Sales) Nil (A) Input VAT Nil (B) Increase in cost (P/L Impact) 82.5 (A-B)
  15. 15. RCM – Reverse Charge Mechanism - Sample CONFIDENTIAL @ Copyright 2016. All rights reserved 1 4Supplier UAE VAT VAT Import of Goods Local purchases Full credit allowed Cost Customer Import VAT India Sale Procurement of Services Customs duty Service Provider Supplier VAT 3 ABC 2 Value + Customs Duty@5% + Import VAT@5% Total Cash outflow AED 1000 AED 50 AED 52.5 (RCM) AED 1050 Value + Input VAT@5% Total AED 500 AED 25 AED 525 Value + Input VAT@5% Total AED 100 AED 5 AED 105 Sales +Output VAT@5% Total AED 2000 AED 100 AED 2100 Month / Quarter End Position Amount Output VAT (Total VAT collected on Sales+ VAT payable under RCM)(100+ 52.5) 152.5 (A) Input VAT -Input VAT + Input credit under RCM(25 + 5 + 52.5) 82.5 (B) Net VAT Payable 70 (A-B)
  16. 16. RCM – Exempted Business CONFIDENTIAL @ Copyright 2016. All rights reserved No credit allowed * VAT to be paid under RCM (No credit allowed hence,cash payment required) 1Service Provider Import of Exempt services Sale OutsideGCC UAE CustomerABC LLC VAT * If the buyer makes an exempt supply, then amount of VAT under RCM becomes a cost for the business. Below diagram illustratesthe case.
  17. 17. CONFIDENTIAL @ Copyright 2016. All rights reserved OutsideGCC UAE Full credit allowed * VAT to be paid under RCM (Full credit allowed hence, onlya bookentry) 1Service Provider Import of services VAT Sale Taxable CustomerABC LLC VAT * If the buyer makes a taxablesupply (Standard rate or Zerorated), then buyer of the goods or services makes the declarationof purchase (input VAT) and shows sales (output VAT) in their VAT return. In this way, the two entries cancel each other from a cash payment perspectivein the same return. Below diagram illustratesthe case. RCM – Taxable Business
  18. 18. CONFIDENTIAL @ Copyright 2016. All rights reserved VATInvoiceTemplate
  19. 19. Cash Flow - Sample CONFIDENTIAL @ Copyright 2016. All rights reserved 2018 20/8/18 Aug 15/9/18 Sep Oct Nov Purchases made (Goods received) Payment to vendor made (with VAT) 20/10/18 * VAT paid to government Recovery form the customer 30/11/18 Cash blockage on account of VAT = 2.5 Cash blockage = 2.5 Cash flowneeds to be planned to optimize the workingcapital requirements Goods Sold (Delivered) 20/9/18 Outflow 52.5 Outflow 2.5Purchase 50 VAT 2.5 Total 52.5 Sale VAT Total 100 5 105 Inflow 105
  20. 20. CONFIDENTIAL @ Copyright 2016. All rights reserved Particulars Amount Purchase Account / Service (Expense) Dr. (Value of Purchase) VAT Input Account Dr. ( VAT on Purchase) Bank/ Name of Creditor Account Cr. (Value of Purchase + VAT input) Cash or Bank or Name of Customer Account Dr. (Value of Purchase + VAT output) Sale Account Cr. (Value of Sale) VAT Output Account Cr. (VAT on Sale) Month end/ Period End Amount Output VAT XXX (A) Input VAT YYY (B) Net VAT Payable ZZZ (A-B) Particulars Amount VAT Output Account Dr. YYY VAT Input Account Cr. YYY Net VAT Payable Account Dr. ZZZ Bank Account Dr. ZZZ CONFIDENTIAL @ Copyright 2016. All rights reserved PostVATAccounting
  21. 21. CONFIDENTIAL @ Copyright 2016. All rights reservedCONFIDENTIAL @ Copyright 2016. All rights reserved VATReturnsCalculation
  22. 22. ISYX VAT Offerings - Options CONFIDENTIAL @ Copyright 2016. All rights reserved • Option – 1 | ISYX VAT Solution on cloud to Integrate with any ERP/Application • VAT Connectors for AX/SAP/IFS • Patch upgrade and VAT Implementation Services • VAT Assessment | VAT Readiness | Pre-Configuration | Configuration | Test & Run • Option – 2 | SAP VAT – TAAS Solution and Sell our Focus Services • Patch upgrade and VAT Implementation Services • VAT Assessment | VAT Readiness | Pre-Configuration | Configuration | Test & Run • Option – 3 | ERP VAT – On-Premise Solution and Sell our Focus Services • Patch upgrade and VAT Implementation Services • VAT Assessment | VAT Readiness | Pre-Configuration | Configuration | Test & Run
  23. 23. Taxable statuses What is the taxable supply? Place of supply? 4 Is there an Exemption? Who is liable? 1 2 3 5 VAT Obligations
  24. 24. GCC VAT Engine CONFIDENTIAL @ Copyright 2016. All rights reserved Engine VAT legislation Updates Invoice Facts addresses good/ Transport Type etc… Single online Code Maps VAT code mapped customer Determine VAT treatment VAT Expert Web … ERP Real time Interface query VAT Expert Web Input transactions Re-coded/ Output … VAT Checker Treatment & Return boxes Customer Tax code ERP VAT Code lookup Real time Interface Offline map of customer tax codes to key invoice legislation & facts
  25. 25. GCC VAT Engine CONFIDENTIAL @ Copyright 2016. All rights reserved Fact 3… Fact 2 Fact 1 VAT Calculation Legislation VIES Check Compliant Invoice Reporting Guidance
  26. 26. GCC VAT Reporting CONFIDENTIAL @ Copyright 2016. All rights reserved Reporting Check Validation Oversight and review INBOX SAP E X T R A C T O R Oracle E X T R A C T O R XLS ISYX VAT Reporting Reconciliations Audited manual Adjustments PDFs XML Fixed file Real time submission VAT Returns ESL Intrastat VAT books Refunds Local listings Sales & Purchase Ledgers
  27. 27. GCC VAT Reporting CONFIDENTIAL @ Copyright 2016. All rights reserved ISYX VAT Reporting Data collection SAP, Oracle connectors Automatic data checks Exception reports Reconciliation Review VAT, listing & Intrastat filing Text & XLS import Manual input Adjustment Errors Warnings Correct Oversight Approve Direct Interface Upload file Manual PDF
  28. 28. CONFIDENTIAL @ Copyright 2016. All rights reserved SAP VAT Computation – TAAS | Tax Service
  29. 29. SAP VAT Compliance at a Glance CONFIDENTIAL @ Copyright 2016. All rights reserved
  30. 30. VAT Computation – TAAS | Tax Service CONFIDENTIAL @ Copyright 2016. All rights reserved
  31. 31. SAP VAT – Localization – Template & Notes CONFIDENTIAL @ Copyright 2016. All rights reserved Microsoft Excel Worksheet Pilot SAP note GCC countries 2477105 - VAT implementation in Saudi Arabia 2456119 - VAT Baseline Package for UAE 2482967 - VAT Baseline Package for Qatar 2484173 - VAT Baseline Package for Oman 2502155 - VAT Baseline Package for Kuwait 2509484 - VAT Baseline Package for Bahrain Minimum Pre-requisites : - ECC Customers: SW component SAP_APPL – release 606 and onward - S4 Customers: all releases of S4HANA - SW component S4CORE – release 100 and onward
  32. 32. ISYX’s VAT Service Categories - a 4 Pillar Approach CONFIDENTIAL @ Copyright 2016. All rights reserved We are actively engaged with our partner network & tax authorities Assessment Services Implementation Services QA Services Audit Services PartnerNetwork Supported by Global Delivery/AGS/Education/ISYXLabs Governmentagencies
  33. 33. GCC VAT Implementation Phase - Approach CONFIDENTIAL @ Copyright 2016. All rights reserved
  34. 34. Question and Answers CONFIDENTIAL @ Copyright 2016. All rights reserved
  35. 35. Sandeep Mahindra +971-523261715 CONFIDENTIAL @ Copyright 2016. All rights reserved

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