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Top VAT Consulting Services and Their Challenges in 2020 and Beyond

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Value Added Tax or VAT is often considered to cost less for businesses. This statement is true for some but in most cases where a business is changing and managing new obligations, VAT can get a little confusing.This is where VAT consulting services and VAT advisors can help. By understanding the basic and key specifications, every organization can successfully implement VAT and prepare themselves for any challenges that they anticipate.

VAT Consulting Services UAE &Their Challenges in 2020

By understanding the basic and key specifications, every organization can successfully implement VAT consulting services UAE and prepare themselves for any challenges that they anticipate.

Implementation of VAT

Usually, the implementation of VAT takes place in four phases. The first phase is impact assessment, i.e. how and what will be the impact of the legislation on cash flow, expenses, revenue, and the technology required to comply with regulations. Second is the planning and implementation, which includes KYC documentation, compliance regulations and reorganization in areas that will be impacted by VAT and also training the staff in VAT requirements. Thirdly, organizations need to do output testing so that the quality of the processes and systems can be assessed. The final stage is post-implementation where ongoing compliance processes are reviewed and improved upon.

There are challenges that can arise at every step of this implementation. The initial stage is the most challenging as businesses need to be ready for the all-encompassing implementation of VAT. Companies need to make sure to assess how much VAT they need to pay and issue VAT invoice and support VAT claims. VAT returns need to be filed periodically (monthly or quarterly) in case tax authorities request an audit trail on any transaction. Keeping track by using a combination of processes and tools will ensure that any issues related to VAT compliance are smoothed out in the long run.

VAT Implementation in Businesses

One major concern wherever VAT has been introduced is that rates always increase, no matter what the initial rate is. VAT rules and rates are also entering a period of volatility as tax authorities try to raise their revenues. The need to keep updating and configure VAT law and policy to keep up with the rapid digital transformation is ever-present. In many cases businesses will need to make significant changes to their IT platforms to implement all aspects of VAT.

VAT fraud is another commonplace issue, especially amongst developing nations.The fraud occurs when a company requests a refund for VAT that was never paid, or does not deliver the VAT that it collected from its customers. There is an ongoing attempt by governments all over to reduce VAT fraud by overhauling their systems which means an ongoing change in regulations and technologies that all enterprises need to keep abreast.

Outsourced Bookkeeping for VAT Compliance

There has also been a change in the compliance requirements as the digital economy grows. From traditional VAT compliance, filing has now gone digital. As the list of challenges grows, organizations need to come up with innovative ideas. Many delegate VAT to finance teams, which means a rise in operational costs of the company. Many therefore turn to finance and accounting outsourcing or co-sourcing partners who have a prior experience and do not need additional training. This serves in the reduction of costs and the risks of missing out on important information or deadlines.