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Sat, Nov 23, 2024 | Jumada al-Awwal 21, 1446 | DXB
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Firms offering VAT compliance solutions have bright future
Dubai - It is extremely crucial for banks to be ready for VAT compliance and the ever-changing regulations.
Nanda Kumar, founder and chief executive officer, SunTec. — Supplied photo
The VAT landscape is evolving within the GCC, and therefore, there is a need for a solution that offers agility to respond to these changing regulatory requirements.
Nanda Kumar, founder and chief executive officer, SunTec – an tech evangelist with over 3 decades of experience — believes, it’s important to have single solution in place covering all aspects of VAT compliance and to be future-proofed given that any future regulatory changes will be handled by one single solution with ease.
“A solution that automates the entire VAT compliance process including centralised rule-based tax determination, input tax recovery, tax invoice, reconciliation, corrections, adjustments, statements, and regulatory reporting. Our expertise has been specifically in the financial services sector and we’ve seen a healthy adoption of our solution.”
In May this year, Saudi Arabia announced that it was tripling VAT to 15 per cent. Oman too announced earlier this year that it was likely to introduce VAT in early 2021. With the implementation of VAT being well underway, deploying a VAT compliance system is no longer an option but a necessity.
“Given the volatile oil prices, governments’ need an alternate source of revenue which is in the form of the VAT policy. Further, banks and financial institutions are amongst the most VAT complex businesses. It is extremely crucial for banks to be ready for VAT compliance and the ever-changing regulations.”
The UAE is among the key markets for SunTec and has partnered with 12 of the 20 major banks, both domestic and foreign. “We help these banks comply with all indirect taxation requirements through our enterprise tax engine. We are currently processing about one billion transactions per year. We are also engaged with a large progressive bank who runs our relationship based loyalty product on the Xelerate platform through innovative pricing which has helped them in customer retention and expansion,” added Kumar.
The pandemic has forced banks and financial services firms to rethink their business models. With customer centricity being a key focus, banks are evolving and assessing the relevance of existing products and services and realigning them to meet changing customer demands. The open banking model will further enable banks to rebuild product and delivery models.
“With UAE emerging as startup capital with most innovative fintech companies in the Middle East and North Africa, banks are looking at collaborative engagement. We are working with some of these banks around some of these initiatives. In addition, after UAE, Saudi Arabia and Bahrain, we are now seeing Oman gearing up for VAT implementation. We are engaged with over 25 banks in GCC and are looking at consolidating our presence across the rest of the GCC markets,” added Kumar.
Recently, in a webinar, organised by Dubai Chamber in collaboration with The Oath Magazine and Pinsent Masons LLP, examined the impact of Covi-19 from a VAT perspective and outlined key considerations for businesses operating in the UAE. Better management of the compliance cycle of VAT can go a long way in helping businesses navigate Covid-19 successfully.
A total of 235 participants attended the webinar, including business owners, managers, finance, legal and human resources professionals representing a wide range economic sectors and fields. The session was moderated by Joanne Clarke, Tax Director (VAT), Pinsent Masons LLP, who is an international VAT advisor specialising in technical advisory, compliance and disputes.
During the webinar, Clarke stressed on the importance of improving VAT cash flows and minimising capital costs associated with the tax. Businesses should actively seek to identify and mitigate real VAT costs that impact their bottom line, she noted.
Clarke advised businesses to be cautious when dealing with transactions and activities driven by Covid-19 pressures such as contract defaults, corporate restructuring, bad debts, as these can have a VAT impact that can be significant and negative if not managed correctly. In addition, she encouraged companies to avoid non-compliance and administrative penalties wherever possible and seek professional support in dealing with tax authority interactions.
Joanne Clarke, Tax Director (VAT), Pinsent Masons said: “While we have all been operating in a Covid-19 environment for the majority of 2020, the real financial impact of Covid -19 continues to be felt at a fiscal level and by businesses alike. In this session, we looked at the Covid-impact from a VAT perspective, to support businesses with mitigating risks, increasing VAT cash flows and potentially optimising their VAT position, so that VAT is not another cause of financial pressure on businesses during this time.”
Jehad Kazim, Vice President - Legal Services at Dubai Chamber, mentioned that the participants benefited from the webinar as it provided an ideal opportunity for them to pose their questions directly to the experts and added that VAT remains an area where businesses in the UAE continue to see guidance and support. She noted that the strong participation in the webinar is a positive sign that the business community is committed to ensuring full VAT compliance and staying informed about important regulatory developments.
— sandhya@khaleejtimes.com
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