Tuesday 16, May 2017 by Georgina Enzer

Over half of UAE businesses are yet to prepare for the introduction of VAT

Fifty-two per cent of UAE-based businesses surveyed in Hays’ recent research do not have a VAT implementation strategy in place for the January 2018 VAT implementation deadline and a greater 60 per cent have not an assigned budget for the change.

In keeping with unassigned budget, the survey found that the majority of organisations plan on implementing VAT without increasing headcount spend, with 61 per cent introducing the new laws using their existing workforce. Of those who have set a budget, the most common is up to AED 100,000 – the smallest bracket spend given in the research, and only five per cent expect to spend over this.

“With UAE VAT law yet to be fully announced, it is difficult for businesses to anticipate exactly how they will implement VAT and the subsequent costs involved. What is clear however, is that organisations need to be understanding the implications now and realising that the introduction of VAT is not just a finance issue. Key support functions, such as IT will certainly be affected, as well as operations,” says Chris Greaves, Managing Director of Hays, Gulf Region.

In support of this, almost one third (27 per cent) of organisations expect to hire non-finance staff, most commonly being IT (29 per cent) and Supply Chain (13 per cent) professionals.


Headcount trends

When comparing organisations employing over 1,500 staff against those with workforces of less than 250 employees in the GCC, the survey found clear trends associated with their relative readiness and spend assigned for VAT implementation. Of larger organisations, 73 per cent have a strategy in place, seven per cent have a budget of over AED 100,000 for implementation and over half (53 per cent) anticipate hiring non-finance staff. This is in contrast to 42 per cent, three per cent and 23 per cent respectively for smaller organisations.

“This correlation is not overly surprising for two reasons. Firstly, the larger organisations, typically multi-national companies, are well practised in the processes and procedures around VAT, having implemented practises and paid it in other geographical locations. They are therefore at an advantage for implementing here in the UAE and can better anticipate the level of expertise, budget and planning required.”

“The second reason is that the Ministry of Finance has announced that some small businesses will be safeguarded from VAT for this initial phase. However, which organisations will fall into this threshold is so far unknown. What is clear, is that no organisation is completely exempt from the effects of this new era of change. Regardless of size, organisations will need to be extra stringent on their reporting processes and practises and organisations should be gearing up now ready for the 2018 rollout. We are already seeing an uplift in the demand for tax specialists across all size of organisation in the region and we anticipate this to increase in the coming weeks,” says Chris.

About the survey

Over 100 senior decision-makers and finance professionals, operating within both public and private sector organisations across the UAE, were surveyed online from February to April 2017. The findings have been compiled into a short report, providing a snapshot on how companies in the region are preparing for the implementation of VAT.

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