Your VAT Readiness.

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1 Your VAT Readiness Value Added Taxation is becoming a reality in the GCC member countries from 1st January If you are not prepared to face VAT implementation deadline by now, you are already too late.

2 Another Good Reason to choose epromis ERP for Your Business The introduction of VAT is the biggest fiscal reform that has ever gone into legislation in the GCC member states. VAT implementation will start from Jan 1, 2018, and likely to be implemented in all GCC countries by the end of the year This much-anticipated VAT implementation will affect nearly all 01 businesses in the UAE and the KSA as well as in rest of GCC. Organizations in Gulf have very limited time for VAT readiness. VAT registrations will open in UAE and KSA from the third quarter of 2017 which will become compulsorily by the end of the year The introduction of VAT demands a restructuring of your current business processes to achieve hassle-free compliance. As per UAE ministry of finance ruling, any business that has taxable supplies or imports of over AED 375,000 must register for VAT.

3 The companies that do not act quickly on assuring VAT compliance by re-organizing business systems may get penalized because of existing systemic inefficiencies. business and operating models to meet the market standard and regulatory or Tax compliance. epromis ERP not only assures your VAT readiness but also modernize your entire business processes. For over three decades now, epromis is supporting organizations in transforming their 02

4 Your VAT Readiness Getting Familiar with Value Added Tax The Value Added Tax is a form of indirect tax that is applied to the consumption of most goods and services, which technically leave no burden of VAT on the businesses. i.e. by registering for VAT, your company can avail the input tax credit paid to the suppliers and pass the burden to the customers. It's a tax on transactions not on profits. As the value added taxation is new to GCC countries, a general concern could have raised in the minds of people about the impact of VAT implementation on businesses which have historically been enjoying a tax-free environment. VAT started its journey from 9 countries in 1969 and is already implemented in about 90% of the countries around the world, as by the end of the year 2015, 166 countries in the world have implemented VAT.Considering VAT s rapid spread and success, it s doubtless that the benefits of VAT on a longer run would surpass the anxiety of its initial days of implementation. A type of general consumption tax that is collected incrementally, based on the value added, at each stage of production or sales. Definition of VAT

5 Your VAT Readiness How does it Work? dress is sold at a price of AED 1,000, it has AED 50 as VAT included in its selling price. This VAT is paid by the consumer who buys the dress. If VAT is charged at every stage of product development, the price of There is a misconception that VAT is charged at every stage of product development life cycle, which is not true at all. It will be 5% of final selling price, not 5% of every stage. For instance, if a luxury items will rise enormously. A supply chain process collects VAT, and end user pays bears the net VAT. MANUFACTURER Sale - material AED 1,000 + AED 50 VAT Sale - product AED 2,000 + AED 100 VAT AED 50 AED 100 AED 50 SUPPLIER AED 100 Government Income AED 250 AED 250 AED 150 AED 150 Sale - product AED 5,000 + AED 250 VAT CUSTOMER WHOLESALER Sale - product AED 3,000 + AED 150 VAT RETAILER *This example is calculated considering the VAT rate as 5% VAT has been a standard source of revenue for governments around the world. In GCC member states, the VAT will mostly impact prices of luxury items. The government of UAE has already announced a list of 100 items that will not be included in VAT. These include education, healthcare, etc. Items exempted from VAT: Local transport (buses, taxis) Residential Property under lease Bare Land Zero Rated Items: Exports outside GCC Medicine and Medical equipment First sale of residential property Education Reasons why VAT is introduced in GCC: The increase in cost of public services To find source of revenue from non-oil sectors To improve the living standards further 04

6 Your VAT Readiness Impact of VAT Implementation on Your Business Processes Although VAT is not intended to be a tax on business rather on the consumer who consumes it, the operating cost of your company is likely to go up while implementing VAT. This could be due to VAT compliance requirements, consultations and documentations, employee training, and updating or upgrading your current Enterprise Resource Planning system. Across the industries, the following processes are impacted by VAT. Deploying the latest VAT enabled epromis ERP will minimize the risks and complexities associated with VAT s impact on your business. 05

7 Your VAT Readiness 1. Procure-to-Pay Global Trading Supplier Management Compliance & Risk Requirements 2. Sales Management Sales Contracts Sales Order Management Claims, Returns & Refunds Cash & Credit Invoicing Supply Chain Performance Management Good Return Sales Monitoring & Analytics Sales & Operations Planning Demand Planning 3. Inventory & Warehousing Goods Issue Goods Receipt Stock Ageing Stock Reservation Warehouse Management Inventory Analysis 4. Accounting & Financials Receivables Management Treasury & Financial Risk Management Payments & Bank Communications Cash & Liquidity Management Profitability & Cost Management 5. Manufacturing Operations Production Control Manufacturing Execution Subcontracting External Processing Repetitive Manufacturing Just-in-time (JIT) Outbound Your VAT compliance requirement checklist will include: VAT registration Filing VAT returns with the TAX authority Remitting VAT Payables Critical matters that require your immediate attention: VAT clauses in commercial contracts VAT compatibility of your ERP system 06

8 Achieve VAT Compliance with epromis, a Global ERP FrontRunner epromis is a US based global enterprise software provider known for innovative products and outstanding service since epromis provides enterprise management solutions like ERP, HCM, CRM and other real time business applications to multiple verticals and industries. epromis ERP in the year 2017 has been ranked 14th among the top ERP systems globally, based on customer experience and popularity. Whether you re already a customer or new to epromis, you can quickly comply with the GCC VAT agreement. At epromis, we understand the need for quick, reliable, and pragmatic VAT implementation strategy. With our industry experience and expertise in the region, we have identified parameters that may influence the VAT implementation roadmap. Our best practice implementation plan enables you to get started with VAT enabled epromis ERP in just weeks. Contact us to learn more about our latest VAT enabled epromis ERP and VAT incorporation program for earlier epromis editions. epromis Solutions The Middle East & Africa - Head Office info@epromis.net The contents of this document are for informational purposes only. This document and its contents, including the functional content, viewpoints and dates expressed herein are believed to be accurate as of its date of publication, August The information, products and services described herein are subject to change at any time without notice. epromis makes no guarantee, warranties or representations with regard to the enclosed information provided in this document. epromis specifically disclaims any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. Each user of epromis Software is likely to be distinctive in their requirements in the use of such software, therefore users of this document are always advised to discuss the content of this document with their epromis account manager. Usage of the epromis software solution(s) described in this document with other epromis software solution(s) or third party products may require the purchase of licenses of these respective products and solution(s). This document may not be reproduced or transmitted in any form or by any means, for any purpose, without the prior written consent of epromis Solutions Inc. Copyright 2017 epromis Solutions Inc. All rights reserved. epromis, the epromis logos, mentioned herein are registered trademarks or trademarks of epromis Solutions Inc. Software Advice s FrontRunners Badge/Award is a trademark of Software Advice, a Gartner company. FinanceOnline.com s Expert s Choice Badge/Award and Great User Experience Badge/Award are trademarks of FinanceOnline.com. Capterra s Top 20 Most Popular ERP Software Badge/Award is a trademark of Capterra, a Gartner company.