No wonder, the transparency and accountability associated with the implementation of value added tax in some GCC countries has strengthened the economies into diversifying and driving the positive changes in the region.
Compared to indirect taxes, value added tax (VAT) is simpler in approach and implementation as the system levies same charges at each level of the supply chain. As stated in an article, “Companies required to register for VAT purposes contributes to the transparency level by enabling concerned government authorities to track businesses and monitor effectively their compliance. This provision also leads to the creation of a reliable and updated database, thereby aiding the governments in their respective economic performance assessments.
Businesses are critical to collecting VAT from consumers. While before they have limited reporting requirements, companies are now required to maintain all necessary records such as tax invoices and make timely report to the government. To comply with their duties under the VAT tax regime, it is imperative, therefore, that they make sure that their relevant processes and transactions are compliant with the provisions of the law.”
This high-level transparency has helped the Governments position themselves as major business hubs in the world and the adoption and implementation of best industry practices has entailed in attracting more global investors, which means “inflows of investments into the region will help reinforce its non-oil sectors and fast-track its quest to build a sustainable future for its citizens and residents.”
The VAT laws has also resulted in enhancing businesses improve their skills within organization for proper monitoring and management of key processes such as financial reporting, tax accounting, and overall compliance procedure.
The article also states clearly how, “Governments, businesses and the public at large are an important element in the successful implementation of the VAT system. Continuous cooperation among them will help create contemporary public services and allow the GCC countries to effectively boost their economies. The trick is to sustain an upbeat public sentiment and a favorable business environment under the tax regime to ensure successful implementation and full optimization of VAT’s immense socio-economic benefits at the local and regional levels.”