Value-Added Tax (VAT) in the GCC Countries

How Oracle can help you get ready.

What Is VAT?

Let’s start with the basics. Value-added tax (or VAT) is an indirect tax added to a product’s sales price. It represents a tax on the value added to goods or services throughout their production process.

VAT has been a standard source of revenue for governments around the world, in European countries like England, France, and Germany, as well as in Canada, Australia, and many others. Now, for the first time, companies in the GCC will have to collect VAT.

How Does It Work?

VAT is levied at nearly every stage of the supply chain, from raw materials to the final product sold in stores. Ultimately, consumers end up paying the tax—but businesses are still responsible for collecting it, submitting it to the government, and reporting on how much they collected; along with how much they deducted for their own costs. With that in mind, it’s important to make provision and plan ahead to efficiently integrate this change into your organization’s processes and culture.

  • Producer

    Collect

  • Manufacturer

    Collect and Refund

  • Distributor

    Collect and Refund

  • Retailer

    Collect and Refund

  • Consumer

    Collect

= Government

How Will VAT Affect GCC Companies?

The vast majority of GCC companies will need to ensure they efficiently and accurately determine and report on VAT requirements by automating these new processes. Businesses that meet a minimum annual turnover will have to register for VAT. But small organizations that turn over less than the minimum requirement won’t need to register. Businesses that distribute goods and services in certain industries, such as healthcare and education, will not need to comply with VAT regulations.

To know more, visit the official website: go.oracle.com/vatgcc.

Key points:

How Can Oracle Help?

For decades, Oracle’s solutions and experts have helped thousands of companies worldwide to comply with local VAT requirements. New approaches include connecting VAT cloud services to on-premises enterprise resource planning (ERP)—such as Oracle E-Business Suite—or simply taking the opportunity to completely digitize and modernize businesses by deploying enterprise resource planning (ERP) in the cloud using software as a service, or (SaaS). In either case, there is a benefit to placing tax functionality in the cloud—namely, you always have access to the latest version of software—rather than using on-premises systems, which require lengthy upgrades.

Oracle updates its cloud applications on a regular basis to ensure you always have the most recent solution to comply with new VAT rates or tax regulations. And with the VAT deadline less than a year away, the cloud can complete either of these approaches in a much shorter time frame than traditional onpremises implementations—typically taking weeks rather than years.

The benefits of Oracle ERP Cloud:

  • Straightforward workbooks to efficiently define and upload tax configurations

  • Prebuilt validations and instructions on all spreadsheet templates

  • Quick tax implementations that can be completed in minutes

  • Spreadsheet templates that seamlessly implement new (or download existing) configurations

  • Up-to-date legal entities that are automatically subscribed to tax regimes

Visit our website to learn more:

oracle.com/middleeast/cloud/saas.html

Whether you’re already a customer or new to Oracle, you can cost-effectively and quickly comply with the GCC VAT agreement.

Existing customers.

If you’re already familiar with our ERP solutions, there are two parts to VAT that you need to consider: tax automation, and reporting and provisioning.

Tax automation involves accurately determining and recording the tax on every transaction. Oracle ERP Cloud features an automated tax solution that enables you to support global configuration and tax rules; automatically apply relevant taxes to transaction data; and access a wide range of reports including generic, standard feature, country-specific, and more.

Reporting and provisioning, which isn’t available with most competing ERP solutions, will involve reporting to government authorities and provisioning an estimated future amount that you’ll pay in VAT.

It’s entirely up to you whether you choose the tax-automation or reporting and provisioning route. But it’s important to consider the following points:

  • Tax automation: You can continue to use your existing Oracle systems as normal, but you’ll need to implement tax modules, which fall under Oracle’s financial suite.
  • Reporting and provisioning: You will need to deploy a cloud-based solution that enables you to carry out tax-reporting and provisioning processes.

New to Oracle.

If you’re looking to deploy a new ERP system, you can get up and running in as little as eight weeks with Oracle’s VAT-compliant ERP cloud offering. Oracle’s rapid implementation strategy will save you valuable time and ensure you comply with the new VAT legislation in weeks, not months or years.

Conclusion

The success of an organization's GCC VAT implementation will depend on its ability to prepare in advance and quickly deploy automated processes across the organization. The good news is that Oracle and its partners have decades of experience to help you along your journey – from discovery to cloud deployment – to not only become VAT-compliant but also to modernize your entire business with the most complete suite of cloud applications.

To best prepare for VAT, visit our website: go.oracle.com/vatgcc.

Alternatively, get a complete overview of what the Oracle cloud suite of applications can do to help your business to lead in the digital economy:
oracle.com/goto/digital-journey-app.

Watch our Oracle ERP Cloud demonstration video:

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