Organisations must train their employees to deal with VAT long before it lands

Author: Kirsty Tuxford | Date: 8 Feb 2017

The talent pool of experienced tax professionals may be limited so plan ahead for 2018, say recruitment experts

Organisations must focus urgently on getting ready for the introduction VAT in 2018, says a report from Deloitte that focused on recruitment challenges in the real estate and construction, tourism and oil and gas sectors.
 
“With only a year to go until the planned implementation of VAT, businesses operating in GCC countries need to get ready,” said Justin Whitehouse, Deloitte Middle East VAT leader.
 
“Our experience, in the recent implementation of VAT in Malaysia, is that the area with the longest lead time is technology, so organisations would be well advised to commence planning any major system changes in the next few months to have a chance of being ready by 1 January 2018,” said Whitehouse.
 
David Stevens, Ernst & Young’s MENA VAT implementation leader agreed: “There will be an acute shortage of VAT qualified and experienced professionals in the UAE and across the GCC for the foreseeable future. This is why organisations need to urgently assess the impact of VAT and prepare plans for the implementation, which include not just IT but also suitable talent and adviser requirements.”
 
A five per cent VAT will apply on many goods and services from next year, though essential food items will be excluded. The International Monetary Fund (IMF) estimates that VAT will generate revenue equivalent to about 1.5 per cent of the UAE’s GDP.
 
The process of incorporating VAT into accounting systems and declaring VAT accurately to the tax authority means that many organisations will require expert professionals with experience in tax and VAT collection, but this kind of talent is in short supply, according to recruitment experts.
 
“Tax is already a niche area of the UAE job market, so factoring in VAT experience and knowledge too means that the talent pool is going to be limited,” said Gareth Clayton, deputy managing director of Charterhouse UAE. “The UAE’s VAT is based upon EU principles, so there could be international talent acquisition. There will also be a drive for consultants, to ensure quick and cost efficient upskilling.”
 
It is important that organisations do have VAT specialists and don’t just expect their current finance staff to figure it out as they go along, says David Stevens.
 
"You cannot just rebadge someone as VAT and perform some rushed training on the subject and expect them to fully appreciate or understand VAT – that takes years,” said Stevens. “These types of advisers or staff will only have rudimentary VAT knowledge and skills.”
 
Clayton commented on whether it is feasible for organisations to train existing employees if they cannot find new, experienced professionals. “There are no glaring reasons as to why not; typically, most professional accountancy qualifications cover an extensive syllabus of taxation. Many of the consultancies and accounting practices will use their international networks to educate in-house and will, over time, provide additional VAT service offerings to their client base.”
 
The need for additional manpower may be more acute for smaller employers who don’t have an accounting system adapted for VAT.
 
The additional expense of adapting to VAT has raised concerns that cost-cutting may be necessary elsewhere. Accountants who lack VAT knowledge will also want to know if they should be worried about losing their jobs.
 
“We haven’t seen any evidence of this yet, although it appears premature to suggest or predict such a trend. VAT implementation will be a financial cost, however it’s unlikely to cost jobs and impact salaries negatively in the medium to long term,” said Clayton.