The slow adoption of technology has been a key obstacle preventing VAT compliance, said Firas Abdulsalam Tayeb, Engineer at Enterprise Systems Analysis Technology (ESAT), whose IT company is involved in the sweeping new changes surrounding the introduction of VAT in the UAE.
Firas explained that ESAT’s IT teams have been heavily involved over the past several months not only in integrating VAT systems into existing or new Enterprise Resource Planning (ERP) systems, but in providing counselling and guidance to clients about how to adopt the technological and process changes.
While the VAT process defined by the government is clear, the one issue that is still hampering adoption among SMEs is lack of knowledge and fear of making mistakes, he said.
“One assumption people have is that the technology to integrate VAT is complex and costly. They fear that compliance will require them to implement an overhaul of ERP systems and that this may in turn affect their current IT infrastructures and lead to other system failures.” said Firas.
Firas, whose company is a market leader in integrating accounting software in ERP systems, said that his company’s VAT modules are easy and quick to configure and integrate. But, he added, compliance requires companies to make adjustments on all levels, from process and system modifications to ensuring that employees are adequately trained.
While companies are making their business and accounting systems VAT-ready, from his experience with clients, business executives are already reviewing processes and procedures to introduce cost cutting measures.
“Companies are trying to ensure that the changes they are making are gradual and will not disrupt other business systems. But choosing the right technology can reduce the cost and burden of implementation while also mitigating administrative errors.”
The most important first steps, he advises, are for companies to get their VAT registration numbers and VAT invoicing modules done, and then take time to properly prepare other mandatories such as the processes for return filing, audits and refunds.
Firas explained that ESAT’s ERP and Customer Relationship Management systems are integrated solutions that can be rolled out rapidly and affordably. The company’s clients, all mid to large sized entities, use ESAT’s IT infrastructure to automate vital processes and to increase efficiencies.
“Our ERP system is trusted and reliable, and for our clients the addition of our VAT modules is gives them a high comfort level as they already use our infrastructure as a complete and ideal platform that streamlines all their processes within one system.”
Established in 2011, ESAT serves companies across the GCC, providing information and consulting, as well as IT software and hardware.
Firas advises companies to manage their working capital and cashflow cycles. He said typically many GCC companies often operate on extended payment terms (sometimes well beyond the contract terms) as clients delay payments. This would essentially mean that businesses would be financing the VAT to the government even before receiving payments from their customers, he said.