Cloud based ERP solutions a faster approach to VAT compliance
An Oracle and Harvard Business Review (HBR) study predicts that the soon-to-be implemented VAT in Gulf Cooperation Council (GCC) countries is expected to initiate a massive wave of digital transformation as businesses prepare to ensure compliance with the new tax law.
The study that is based on a poll of 450 senior company executives from across GCC reveals that 73 per cent of businesses consider VAT implementation as a key opportunity to initiate wider digital transformation projects within their organisation. With businesses required to automate their processes to ensure that transactions are captured flawlessly for VAT compliance, 66 per cent of respondents also said that they would consider transitioning their business processes from on-premises systems to the cloud if major cost savings can be identified.
“Cloud adoption across GCC countries is growing at a rapid pace and becoming mainstream as businesses now realise that cloud applications offer them speed, innovation, security, and better return on investment. IDC estimates that Public Cloud spending across the META region will reach 715 million USD in 2017 and VAT compliance is expected to further drive this trend,” said Arun Khehar, Senior Vice President–SaaS, ECEMEA, Oracle.
“There are several benefits of placing tax functionality in the cloud, as the applications are updated by vendors on a regular basis; if the amount of VAT changes, or if another tax regulation is put in place, system upgrades will be automatically rolled out with the next release. More importantly, with VAT in the UAE and Saudi Arabia taking effect on 1 January 2018, it is important for organisations to ensure timely preparedness, which an ERP Cloud solution can achieve within weeks.”
With the VAT compliance deadline quickly nearing, the Oracle and HBR study also explored the current VAT preparedness levels of businesses across GCC. While 21 per cent of respondents confirmed that they have initiated preparations to be VAT compliant; 30 per cent indicated that they currently have limited information on VAT.
In addition, 47 per cent of respondents said that they are awaiting further guidance from local governments before initiating their VAT compliance project.
Furthermore, when asked about the biggest obstacles on their journey to be VAT-compliant, 68 per cent of respondents said that managing business process changes would be a key challenge. And 38 per cent of respondents cited a lack of qualified internal tax experts and another 35 per cent were found to be uncertain about the changes that a new technology implementation would bring.
“With just a few months until VAT goes live, many companies urgently need to change their business processes, IT systems, and scale up their workforce,” said Aarti Mohan, ERP and EPM application strategy leader, Oracle. He advised all businesses to start now with a 360 assessment across the business to evaluate the potential impact and transformation needs to quickly become VAT-compliant.