It is vital that organizations in Bahrain evaluate the impact of value-added tax (VAT) on their operations and take measures to ensure a smooth roll-into VAT throughout the whole services’ supply chain, said an industry expert.
Jamal Fakhro, managing partner of KPMG in Bahrain, was speaking in a panel discussion organized yesterday (January 20) by the CFA Society Bahrain to discuss the introduction of VAT in the Kingdom.
Senior accounting and finance professionals from banks, insurance companies, and large corporations obtained from KPMG experts further valuable insight on the impact of the proposed new tax system on their businesses and the impact it would have on the overall economic landscape in Bahrain.
Fakhro explained that the introduction of VAT at a 5 per cent rate, expected by the second half of 2018, would lead to changes for the local business landscape.
“Bahrain has always been known as a tax-free economy although levies and charges have always been present. The introduction of a consumption tax on most goods and services will inevitably require an updated approach to the way of interacting with business partners and final consumers. There is continuous risk for business disruption and reputational damage if VAT is not managed effectively prior to introduction and beyond go-live,” he added.
Philippe Norre, head of Indirect Taxes at KPMG in Bahrain, elaborated on the complexity of managing VAT throughout the entire commercial chain, including business transactions inside and outside of Bahrain and assimilated hidden transactions.
“Managing accounts and monitoring VAT in all transactions is not an easy task but can be handled efficiently with a tailored Control Framework and specific VAT procedures and processes that are adhered to by all stakeholders in the business, and not just Finance. Having a technology-enabled processes, whether by upgrading existing Enterprise Resource Planning (ERP) systems or carefully rolling out add-on tools embedded in the overall digital strategy of the organization, is a must-do to ensure accurate tax reporting, avoid financial penalties and navigate government requirements,” said Norre. – TradeArabia News Service
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