DUBAI: The introduction of VAT on businesses in the region will have a broad impact, according to experts.

EY hosted the annual MENA Tax Conference in Dubai, featuring panel sessions on the key challenges facing taxpayers in MENA today.

The conference brought together C-suite executives from leading multinational companies to provide the latest updates on the changing tax landscape in MENA.

Sherif El-Kilany, MENA tax leader, EY, says: “The tax landscape across the MENA region is currently going through major changes.”

He added: “GCC governments are now starting to cut subsidies and introduce taxes to help combat the deficit created by the lower oil prices.

“Changes in the global tax landscape are also expected to have a knock-on effect on MENA countries.

“Governments across the world have long been concerned about the shifting of profits into low-tax jurisdictions and corresponding reduction in tax in higher-tax jurisdictions.

The recent recommendations by the Organization for Economic Cooperation and Development (OECD), that address different aspects of base erosion and profit shifting (BEPS) are likely to impact countries in MENA that are typically known for having low taxes.”

The EY MENA Tax Conference is held in major cities across the world including Dubai, London, Houston, Tokyo and Seoul, with the aim of keeping companies that operate in MENA updated with key tax developments.

The  introduction date for VAT has now been confirmed by GCC Government officials as of Jan. 1 2018.

The MENA tax conference featured a session on preparing for VAT in the GCC, providing status updates on the tax implementation and the actions that companies in the region need to take.

Finbarr Sexton, MENA indirect tax leader, says: “The introduction of VAT on businesses will have a broad impact.”

“It will diversify government revenue sources and reduce reliance on oil revenues to finance Government expenditures. The additional revenues collected are likely to fund programs for the development of job opportunities for nationals and improve education and health care in the GCC. If VAT is not applied correctly, it may become an additional cost to the business.

“Further, non-compliance with tax laws attract severe penalties. All businesses must undertake a review of their current contracts to determine if VAT has been appropriately addressed.”