Technology vital for smooth introduction of VAT
Technology vital for smooth introduction of VAT
Saudi Arabia’s General Authority of Zakat and Tax (GAZT) recently released the final implementing regulations governing VAT in the country. It will be set at 5 percent when it comes into force on Jan.1, 2018. That is the same level as in all GCC jurisdictions, relatively low from a global perspective, and especially when compared to OECD countries such as Britain where it is 20 percent.
VAT has been introduced in GCC jurisdictions following a collapse of the oil price that hit government finances, and is designed to underpin economic stability and maintain living standards in the region.
Direct revenue from the tax is expected to bring in the equivalent of 1.6 percent of Saudi Arabia’s GDP annually, according to estimates from the International Monetary Fund.
Speaking as PWC unveiled its report, partner Jeanine Daou said: “Technology and innovation should be high on governments’ agendas in order to make the VAT process as effective and transparent as possible.”
She said the introduction of new taxes in any society would involve a period of adjustment for taxpayers and the public at large.
“Post-Jan. 1, 2018, the use of knowledgeable teams and efficient processes and technology will be critical in ensuring a workable transition,” said Daou. In a report published Oct. 25, another consultancy, Deloitte, said beside bolstering government revenue, the introduction of VAT would bring Saudi Arabia more in line with countries on the MSCI Emerging Markets Index, for which the Kingdom has been listed as a possible addition.
“Indeed, many MSCI countries have applied even higher rates; Malaysia has a 6 percent goods and services tax, while Russia and Turkey have an 18 percent VAT,” said Deloitte.
The PwC report formed part of the latest edition of Paying Taxes 2018, compiled in collaboration with The World Bank.
The total tax and contribution rate (TTCR) increased by 0.1 percentage points, to 40.5 percent; with the largest increases resulting from corporate income taxes and turnover taxes.
On the other hand, the Middle East region continues to have the lowest TTCR and time to comply, reflecting the relatively few taxes levied on the case study company and a reliance on other sources of government revenues. In 51 of the surveyed economies with a VAT system, no VAT refund was available for PwC’s case study company, “suggesting that there is significant room for improvement in post-filing processes in many economies.”
The report found that the average Total Tax & Contribution Rate is 24 percent in the Middle East region; and it took the case study company an average of 154 hours to comply with its tax obligations, a fall of three hours from last year.
The Paying Taxes 2018 report examined the ease of paying taxes in 190 economies, modeling business taxation in each economy using a medium-sized domestic case study firm.
“Both the time and number of payments needed to comply have continued to fall significantly, reflecting the increasing use of technology,” said the study.
It added that the time needed to comply with labor and profit taxes fell by 2 hours (to 61 hours for profit taxes and 87 hours for labor taxes), compared to last year, with labor taxes showing the greatest reduction over the life of the study (since Doing Business 2006).
“Electronic filing and payment, improved tax and accounting software and pre-populated returns are among the key drivers.”
The report also found that the number of tax payments made has fallen by around one payment for the second year in a row, driven largely by increased online filing and payments capabilities, new web portals and the greater use by taxpayers of online systems.
China sorghum imports jump after Beijing dropped probe into US shipments: Customs
- China brought in 450,000 tons of sorghum in June, up from last year’s 324,301 tons
- Corn buyers, meanwhile, scooped up cargoes on worries over the return of US-China trade policy tit-for-tat amid high domestic prices
BEIJING: China’s sorghum imports in June surged 38.1 percent on year, boosted by a temporary easing of Sino-US trade tensions, while corn imports for the month rose to one of highest levels in the past decade, customs data showed on Monday.
China brought in 450,000 tons of sorghum in June, up from last year’s 324,301 tons. Volumes were still down slightly from 470,000 tons in May, data from the General Administration of Customs showed.
Beijing announced in mid-April that importers of sorghum from the United States would have to put up a 178.6 percent deposit on the value of shipments. Several cargoes already on the way changed course and were diverted to other markets.
A month later in a goodwill measure, however, China dropped the deposit and an anti-dumping probe into US sorghum imports as the two sides appeared to be reaching consensus on resolving trade issues.
“Some cargoes were already on the way to China when Beijing dropped the deposit. Then they cleared customs in weeks after. That should have pushed up the June volumes,” said Cherry Zhang, an analyst with Shanghai JC Intelligent Co. Ltd, before the data release.
Corn buyers, meanwhile, scooped up cargoes on worries over the return of US-China trade policy tit-for-tat amid high domestic prices.
Corn imports in June hit 520,000 tons, up 34.6 percent from a year ago and the second highest since July last year. The figures were down from 760,000 tons in May, the data showed.
The corn imports in the first six months tripled to 2.21 million tons, already close to China’s total 2017 purchase of 2.82 million tons of the grain, according to the data.
“There were margins importing corn as domestic corn prices were relatively high. And buyers were buying more corn in recent couple of months to prepare for the Sino-US trade tension in advance,” said Meng Jinhui, an analyst with Shengda Futures.
UScorn and sorghum shipments to China should drop significantly in July and August, analysts and traders said, as Beijing imposed a 25 percent tariff on US grains on July 6.
China buys almost all its sorghum imports from the United States.
In the first half of this year, China has brought in 3.25 million tons of sorghum, up 8.7 percent from the same period of 2017, the data showed.
China also brought in 590,000 tons of barley in June, down 5.6 percent from a year ago. Barley imports for the first half of the year were at 4.4 million tons, down 2.7 percent.
Wheat imports were at 310,000 tons in June, down 33.6 percent from a year ago. Wheat imports for the first half were at 1.95 million tons, down 26.4 percent, the data showed.
China bought 280,000 tons of sugar and 98,566 tons of pork in June. In the first half of the year, China’s sugar imports were at 1.38 million tons, and shipments of pork were at 647,985 tons, both down from last year’s levels.