The planned 5% value-added tax by January 2018 may affect the cash flow of companies in the Emirates, experts warned in a report by the Arabian Business.
A bank executive raised concerns against possible delays in the refund system, citing the example of Malaysia where he said official were overwhelmed by the tax returns after imposing VAT two years ago.
“However, authorities wanted to first audit the returns before starting the refund process and delays could have pressure on a company’s cash flow,” BDO advisory executive director Mok Chew Yin said in the report.
Brian Conn, partner at the BDO tax advisory services, also told Arabian Business that “even large companies won’t be ready for VAT.”
“Cash flow is one of the things often forgotten with VAT with no clarity on how long the refund processes will take,” Conn said.
“If you have a business where the money is flowing through, you can say VAT does not have much impact on my business, but naturally at any one point you might either be owing a lot of money to the government or you might be waiting for a refund,” he added.
He said small and medium enterprises in particular have to be wary.
An earlier report said the government is already holding workshops to educate businesses on the plan and its implications.
