04/05/2017 07:34 AST
With Qatar taking a major step towards introducing the Value Added Tax (VAT) yesterday, ‘it’s time for companies and business in Qatar to start gearing up for new taxes and get ready for the change in local businesses landscape’, top tax experts told The Peninsula.
Until recently a number of businesses thought that VAT would not be introduced in the Gulf. The approval by the Qatari Cabinet of the draft VAT Bill is further evidence that VAT is coming, and coming soon, Jeremy Cape, Tax Partner, Squire Patton Boggs at London office told The Peninsula.
Jeremy, who advises on a wide range of issues, including finance, restructuring and insolvency, funds, outsourcing and M&A said : “Although it always essential to read the legislation when it is published, businesses can and should already be preparing for VAT. In particular, any existing contracts should be reviewed, as many of them will have been drafted without considering VAT”
“It is to be hoped that the government will provide clarity regarding pre-1 January 2018 transactions. For example, if a contract is silent on VAT, will the supplier be entitled to charge VAT?”, Jeremy said.
Craig Richardson
Craig Richardson, Head of Tax at KPMG in Qatar, stressed the importance for companies getting ready for the new tax regime. The implementation of VAT will change the local businesses landscape, Richardsonaig commented on today’s cabinet decision to approve the draft.
“Although Qatar has been relatively silent about its progress on the implementation of VAT, this important step shows that the country is gearing up and on schedule for introduction of VAT in 2018. Before implementation, businesses can undertake a high-level review of the impact VAT will have on their transactions, legal framework and systems and which will help them comply with legislation and make necessary changes to existing processes. There are also immediate measures which businesses can take today to avoid the impact of VAT, for example making any planned significant investments in business infrastructure and assets before implementation begins,”he said.
Today, the Cabinet has approved a draft law on VAT and its draft executive regulations. Once the local legislation is released, it will provide details on how the State of Qatar will interpret the GCC framework and deal with key matters where it has discretion. These will include whether to treat certain supplies as zero-rated or VAT exempt. The local law will include details on the conditions for VAT deductions, VAT grouping, transactions assimilated with taxable supplies, record and reporting requirements and further definitions to enable a correct VAT treatment by companies of their supplies and overall business environment.
Experts at Deloitte say there are a number of actions businesses can take log before VAT is implemented to determine their systems, processes and contractual agreements.
The Peninsula spoke to a number of local business leaders and people. There seems to be a sense of big confusion prevailing among many of them, like which types of businesses will come under VAT net and which products and services will be exempted from it.
“It seems we have to change the way we do our business. Except GCC and a few other countries, VAT exists everywhere be it is the UK, Europe, America, India or Fareast countries”, said Azim Abbas, Managing Director of Al-Sulaiman Jewelry and Watches, subsidiary of Al Sulaiman Group.
The Peninsula
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