VAT is a reality for Bahrain – the question is ‘when’, not ‘if’. How much time will it take for your business to get ready for VAT? What does ‘getting ready’ involve?
Leading practice suggests four steps to VAT implementation:
- Identify VAT’s impact. Business leaders need to identify the impact VAT will have on existing practices, systems and policies. Your VAT consultant will, having analysed what your business does, advise you on VAT’s impact. Your VAT adviser will typically send a questionnaire, ask for information, or conduct interviews to develop a clear understanding of your business.
- Design. Once impacts have been identified, you need to determine which processes, documents, systems and policies must be amended to comply with VAT. Often, a combination of changes will be required to address a single impact. Sometimes there is more than one way of complying with a particular VAT rule. In these instances, you will need to weigh up potential options and make a decision that is both pragmatic and commercially sound. Your VAT adviser should advise you on technical details and review proposed changes with you.
- Implement. Once proposed changes have been decided and agreed, you need to start implementing those changes. In the implementation phase, your VAT adviser plays more of a support and review role, guiding you and reviewing changes as they are implemented. Most VAT advisers will offer technical training through a combination of formal seminars and informal discussions with relevant divisions throughout this phase.
- Comply. In theory, you should be VAT-ready after the implementation phase. However, your finance teams will face both practical and unforeseen challenges once VAT goes live and they are likely to need support when preparing their first VAT return. Most VAT advisers will review the first VAT return prepared by a business prior to submission to the tax authorities to identify areas needing rectification. A good VAT adviser will be able to recommend additional changes that may smooth the compliance process.
How long does this take?
Based on our experience of working on over 150 implementations in Saudi Arabia and the UAE – as well as previous experience in Malaysia – a business typically needs 2-6 months to get ready for VAT. Timeframes depend on the complexity of both your business and your IT systems, and how much your business prioritises VAT implementation.
To discuss how your business can ‘get ready’ for VAT, contact Keypoint on +973 1720 6879 or firstname.lastname@example.org