VAT in the Middle East

The introduction of Value Added Tax will be a significant change for businesses. VAT has a broad scope and businesses will need to consider the impact of VAT on all their transactions and the potential impact on prices and margins.

Our key VAT experts

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Our VAT compliance publications

What VAT means for your business

Business impacts
Reflecting the VAT law
Compliance
Technology & systems
VAT implementation

Business impacts

You should be aware of:

The potential effects on margins and pricing
The tax impact from VAT leakage
The impact on cash flow: funding of timing differences between paying VAT and being paid by suppliers and receiving any refunds
The VAT issues when undertaking deals

Sales & Marketing

VAT treatment of sales and exports
Effect on demand from price increases
Determine a pricing strategy and impact on payment terms
Design and roll out of customer communications
Assess the impact on current contracts and commercial arrangements

Procurement

Ensure the VAT treatment of purchases and imports is considered
Procurement strategy in terms of input VAT capture
Establish vendor communication plans
Assess the contracts and arrangements

Reflecting the VAT law

You need to ensure:

You apply the correct VAT treatment to your sale and purchase transactions
You are aware of the specific issues related to your industry
You track VAT on inter-company transactions
You track and manage your intra-GCC and cross border activities
You recognise which supplies are zero rated and exempt
You apply VAT on your acquisition of services from abroad (reverse charge)

Compliance - throughout the value chain

From the start you should:

Map your business transactions throughout your value chain encompassing procurement, production, logistics, sales and marketing activities
Have a clear VAT management framework covering governance, control, roles and responsibilities
Build capabilities and VAT expertise

Technology & systems

Your systems should allow you:

To be VAT compliant
To have the correct VAT coding of accounts payable and receivable transactions
To have appropriate internal controls and processes

The VAT implementation project

You need to consider:

Sponsorship and governance
Scoping and sequencing to be ready for the go live date and manage costs
Sourcing of resources
Involving all relevant stakeholders

What businesses can do now

Project Management

Identify VAT implementation strategy: in house, outsourced, combined
Identify and engage key stakeholders
Appoint VAT implementation project manager

VAT Technical

Understand VAT treatment of business economic activities
Perform Financial Modelling to estimate liabilities and costs

Business Processes

Understand how VAT impacts business functions and processes

Technology

High level understanding of existing systems (i.e. ERP) to identify capability to cater for VAT

Learning & Development

Start VAT awareness
Assess resourcing and training needs

Downloads

An introduction to VAT in the GCC

This publication has been prepared to provide a general overview of how VAT works and the related operational considerations in order to assist businesses to successfully implement the tax and manage VAT post implementation.

Download

Egypt VAT law published in the official Gazette and takes immediate effect

The Egyptian Parliament has discussed and approved the new Value Added Tax (VAT) law on 31 August 2016, and the law has been published in the Official Gazette taking effect on 8 September 2016.

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Global VAT Online

Global VAT Online provides access to current details on VAT/ GST rates, rules and obligations for over 70 countries, across six continents: Europe, North America, South America, Asia, Australia and Africa.

These details are accompanied by extensive supporting documentation such as copies of return forms, links to useful tax authority and other websites and more.

Download our VAT application

Contact us

Mohammed Yaghmour

Middle East Tax & Legal Services Leader, PwC Middle East

Tel: +966 56 704 9675

Jeanine Daou

Indirect Tax Leader, PwC Middle East

Tel: +971 (0) 4 304 3744

VAT in the Middle East

Our key VAT experts

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