Muscat: Gulf Cooperation Council’s (GCC) proposed value added tax (VAT) regime is to adopt the best practices from the European model, tax expert said.
“As of date about 114 countries plus the European Union (EU) have adopted the VAT regime with tax rates varying from 25 per cent in Denmark to 10 per cent in Lebanon and Egypt,” said Davis Kallukaran, managing partner of Crowe Horwath.
He was welcoming the guests at the tax workshop being conducted by the firm on Wednesday. The business community is concerned on how the VAT will impact their businesses,systems and processes, he added.
Earlier Mohamed Jawad Hassan Al Suleiman , advisor at the Ministry of Finance, inaugurated the event. Speaking on the occasion he said that the VAT is proposed to be in place from January 2018 onwards. VAT is a new fiscal instrument for revenue stability during periods of fluctuating oil prices and can offset revenue losses from depleting oil reserves.
Challenges in introduction of VAT
The biggest challenge for implementation of VAT is the eCommerce, said Hicham Al Moukammel, managing partner at Crowe Horwath Lebanon.
The inventory getting blocked with the increase in VAT is also one of the challenges in the management of working capital, he further added.
Leading the presentation on VAT from a European perspective Robert van Brederode from the Atlanta office of Crowe Horwath said that 2018 January is very short time for getting prepared for VAT. Getting the right people, setting the system modification,training the people are key challenges in the implementation, he added.
Narasimhadas, head of compliance from Crowe Horwath UAE, engaged the delegates on Foreign Account Tax Compliance Act (Fatca) of the US. Fatca ensures that the income generated from the assets and accounts held by US citizens outside the US are taxed by the state. In this connection he said that the obligations on financial institutions to meet with the reporting requirement of US federal agency is also laid out.
Later in the afternoon sessions on Withholding Tax Provisions, Taxation of Permanent Establishments and the Double Taxation Avoidance Agreements were also held by MK Sreedhar (formerly of Oman Taxation).
Crowe Horwath is a top 10 accounting network headquartered in the US and operating out of 750 offices located in over 130 countries with 33,000 partners and staff across the world.