Goals and Objectives
The UAE Government announced the introduction of Value Added Tax (VAT) on goods and services as part of a national strategy towards building a diversified and robust economy and to reduce the dependency of oil as a key contributor to the public purse. The government announced that VAT will be effective on 1st January 2018. Hence, we, as a DP World UAE Region had to play our part in contributing to the economy and be ready by 1st January.
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Project Team members
This was one of the largest projects undertaken by the Company in recent years and comprised of large teams of more than 120 staff from different departments such as:
- Finance (Project Leader)
- Information Technology (For system design, configuration and system implementation)
- Procurement – Supplier relations and communication
- Commercial (Customer relations and ensuring no business interruption)
- Legal (For any legal matters and guidance)
- Corporate Tax Team and Deloitte (For advisory).
I got the opportunity to directly work with Top Management from various departments and provide them with advice and progress updates. I as one of the of key members in the implementation team was held accountable that we meet the project deadline without any interruption.
Project Scope
At the beginning of the project on May 2017, we started the implementation for only one entity (i.e. DP World UAE Region). However, due to the Company’s rapid expansion and growth, the finance department was turned in to a shared service department catering for 4 additional companies namely: Economic Zones World, World Security, Dubai Trade and Smart Solution Logistics.
Due to the creation of shared service department, we were required to implement VAT for all these companies and ensure that these Companies are ready for VAT by 1st of January 2018.
Challenges faced
- Due to the creation of the shared service department, we had to rethink the process and consider the lines of business and the environment in which all these companies operate without compromising on quality and timeline.
- Lack of clarity on various issues from the Federal Tax Authority.
- Several VAT laws and regulations were released very late. Some were released just before the effective date and others after the effective date. We had to take a pragmatic approach at the same time ensure business relationships with customers and suppliers without compromising on regulations.
My initiatives
- In areas where there was lack of clarity from the authority, I initiated communication and meetings with various government departments and organizations, including Department of Finance and Free zone council at an early stage of the implementation to discuss the impact of VAT on the Company’s operation and provided feedback where required.
- Benchmarked with other ports and free zones and acted as an example for many companies thus avoided adverse impact on business which could arise from delay in announcement of VAT regulations.
- Convinced tax advisors to apply a zero rate on some of our services by advising to apply Article 33 instead of Article 34 allowing the company to remain competitive in the market.
- Registered all companies for VAT with the authority before the deadline.
- Documented training materials and arranged/conducted various training for the staff from impacted departments.
- Provided advisory services to all departments and companies on all scenarios and transactions.
- Reviewed all GL codes and transactions (over 7000 transactions) covering different scenarios and ensuring that these transactions are intelligently mapped to a VAT regulation.
- Lead the centralized VAT return function and ensured all VAT returns are submitted on time to avoid fines and penalties
- Automated VAT returns approval matrix thus reducing paperwork.
Project Outcome
I am ecstatic that we were ready to go live by early morning of 1st January 2018. Myself and my team were at the office at 3:00 am on the day of implementations (While many were celebrating the new year) to ensure that everything went fine. The top management was thrilled and I happily received a certificate of appreciation and a trophy from the CEO.
Post-implementation audits were conducted by the internal audit team and the auditors expressed their satisfaction with the whole process.
Submitted the first VAT returns for all the Companies without delay, audit issues or penalties.
Lessons I learned
- Since I worked with many senior individuals, I learned to act more professionally and behave in the presence of people of authority.
- I studied the VAT regulations and researched from various sources and learnt the importance of indirect taxes.
- Working with a large team enabled me to learn how to deal with different people and meet their different expectations while at the same time following the rules.