VAT Implementation in the GCC - EY

1 VAT Implementation in the GCC. How will this impact your business? Did you know that for business VAT introduction in the GCC region operating across the GCC . Are you ready? You may be partially VAT exempt and lose some of your input VAT, The clock is ticking toward the We understand how critically even if you are a generally a introduction of the GCC Value- important a successful VAT. VATable business elsewhere? Added Tax (VAT) on 1 January Implementation is You may be required to register for 2018 EY has a proven track record VAT even without local physical Adoption of a VAT by the GCC and the breadth of experience presence?

2 States comprising Bahrain, and insight necessary to provide You need to ask your taxable Kuwait, Oman, Qatar, Saudi the consistent and good-quality supplier to issue a VAT invoice or Arabia and the United Arab service offerings that are risk losing input VAT recovery? Emirates represents a major needed at this critical juncture A business customer in a local- shift in tax policy. The for a successful Implementation to- local non-retail transaction Implementation of a VAT has an of the VAT mandate may be responsible for payment impact on all the segments of We are ready to start now and of the VAT?

3 The GCC economies and entails a help you get VAT ready Intra-GCC supplies of goods and fundamental change in the way services will be subject to consumption taxes are enforced reverse charge principles in the region VAT timelines Expected GCC VAT rules not December 2015: GCC Finance ministers confirmed business as usual . that the provisions of the GCC VAT Framework Agreement have been broadly agreed GCC States are considered as a single economic zone January 2016: UAE Minister of State for Financial and the GCC VAT regime will encompass many of the Affairs and Saudi Arabia Minister of Finance features of the EU VAT regime confirmed that VAT will be implemented in the GCC.

4 Very broad nexus rules, which may require States in 2018 and the UAE will go live on 1 January 2018 registration for VAT without significant business presence April 2016: Finance Ministers in the GCC working on Implementation initiatives to achieve VAT go-live on Exemptions may be based on the status of the 1 January 2018 customer and not solely on the type of the By October 2016: the GCC VAT Framework transaction Agreement is expected to be ratified Limited scope of exemptions, including Government services for education, health and social services A single standard VAT rate of 5 %, 0% and exempt Our credentials to serve The reverse charge applies on certain goods and EY has the largest dedicated VAT team in the MENA services received from other GCC States.

5 Confirms region that the same VAT consequences as if the recipient EY has highly experienced team in the GCC with obtained those services from a local supplier Substantial Implementation experience to assist Mandatory and elective VAT registration thresholds. clients The global EY organization has wide-ranging VAT Group Registration aggregation and experience in former VAT/Goods and Services Tax disaggregation legislation proposed (GST) introductions including recent implementations in the Bahamas, China, India and Malaysia Gulf Cooperation Council The VAT countdownhas started 2.

6 What should businesses consider? Can you properly account for and manage VAT? Have you considered the impact of VAT on your Revenue business? Operations Costing Pricing and budgeting Profitability Product design Cash flow Business model Forecast Contracts and other business documents Accounting Customer and vendor renegotiation Reporting Training Compliance VAT Finance What are the enhanced compliance requirements for Can your systems adapt? VAT? Business operating systems Invoice compliance management (issuance Accounting system and verification) Related interfaces VAT filing compliance management IT Internal control system Internal control management Tax management system Policies, guidelines, manuals Group VAT registration EY's tried and tested VAT service offerings Pre-go-live Post-go-live Primary pre-go-live offerings Other pre-go-live Post-go-live offerings VAT impact assessment offerings Review is it working?

7 We regularly advise clients on the impact Rulings and opinion letters Post-filing VAT return of VAT on their business operations. EY VAT Implementation and review has extensive knowledge of the GCC VAT execution projects: VAT compliance initiatives and can help you prepare to Ongoing processes, VAT process design or comply with the VAT mandate operations and compliance review VAT training monitoring Data analytics and The VAT training program has been analysis Audit support and developed as a direct response to the voluntary disclosures Systems need for practical VAT training for non- Implementation VAT specialists who have responsibility or a role to play in their organization's VAT Tax coding and accounting obligations.

8 We can also tailor transactional analysis VAT workshops to meet your specific Working with local business needs and/or global IT. White boarding providers for special systems EY VAT teams set the standard when it comes to assisting global businesses as Tax engines and they develop their VAT strategy. During determination white boarding sessions, we can suggest Cooperation with tax processes and systems that address both engine providers compliance risk and revenue generation, VAT registrations support and tailor our analysis to your company's specific circumstances 3 Gulf Cooperation Council The VAT countdownhas started EY | Assurance | Tax | Transactions | Advisory EY contacts for VAT inquiries About EY Finbarr Sexton EY is a global leader in assurance, tax, transaction and advisory + 974 4457 4200.

9 Services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver David Stevens on our promises to all of our stakeholders. In so doing, we play a + 971 4 312 9442. critical role in building a better working world for our people, for our clients and for our communities Saulius Adomaitis EY refers to the global organization, and may refer to one or + 971 4 701 0604. more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity.

10 Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to Jennifer O'Sullivan clients. For more information about our organization, please visit + 974 4457 4116. The MENA practice of EY has been operating in the region since Nicola Butt 1923. For over 90 years, we have grown to over 6,000 people + 971 4 701 0100. united across 20 offices and 15 countries, sharing the same values and an unwavering commitment to quality. As an organization, we continue to develop outstanding leaders who Iliana Panova deliver exceptional services to our clients and who contribute to + 971 4 332 2039.