Small businesses adopting digital solutions to comply with VAT

Sajjad Ahmad, Chief Reporter

Small businesses are vital to the UAE’s socio-economic development as they help generate jobs, open substantial opportunities for innovation, diversify the national economy, and a host of other major contributions. In the UAE, which ranks 11th in the World Bank’s 2019 Ease of Doing Business report, small businesses are considered an economic pillar fundamental to the country’s steady progress and prosperity as well as global competitiveness.

The development of the small and medium enterprise (SME) sector, in general, is one of the government’s top priorities evidenced by numerous benefits they enjoy. These include fast and easy approval of their licence application, dedicated training programmes, and the much-needed financial support. A number of institutions have been established to know and address their requirements. Now accounting for more than 90 per cent of the total number of companies operating in the country, SMEs will continue to influence and act as the key to the Emirates’ future exponential growth.

“Small businesses are key drivers of an economy. By adopting an appropriate modern approach and integrating the right advanced technologies, small businesses can bring their growth to the next level in today’s digital age. Digital transformation all boils down to how a small enterprise can integrate next-generation technologies to simplify their processes and procedures, enhance their products and services, deliver outstanding customer experience, revolutionize employee interaction, optimize data management, secure networks, and many more. Digital transformation leads to automation of processes, as such, human errors are minimized and services can be customised for greater benefits and according to organisational and customer needs. We have to keep in mind that digital transformation is for everyone regardless of the size of the business,” said Vikas Panchal, Business Head- Middle East, Tally Solutions.

In the UAE, a substantial number of small businesses have already deployed a VAT-compliant software to manage all the accounting, inventory and other business operation complexities and in the coming days more and more small businesses in the UAE will integrate the latest technologies into their systems to comply with VAT law. This move will allow them to continue to focus on their core business and other mission-critical objectives, while ensuring effective compliance.   

“Automating relevant business processes in today’s time, particularly under the VAT regime is critical. At Tally we understand the nerve of SME businesses and strive to deliver our services to make the entrepreneurs life easy. Our automated solutions are extremely simple, reliable and flexible and easy to integrate and use. Within minutes organisation can obtain real-time reports such as balance sheet, profit and loss statement, inventory, cash flow projection, and others at the a click of a finger,” added Panchal.

According to Panchal, investing in modern infrastructure is the need of the hour. He said, “Automated infrastructure ensures that required documents and other data are electronically stored and written for easy and fast recording, transmission, and retrieval. Moreover, it can help lessen paperwork, help meet deadlines, allow real-time access to data and other critical information, and lead to more effective and efficient processing and filing of tax returns and other required documents. Additionally, having a unified technology platform leads to more efficient and effective processes as well as more accurate and higher compliance level. Organisations can leverage modern technologies to meet stringent compliance requirements and other conditions and deadlines set by tax authorities. In this regard, hefty penalties are avoided and business credibility is established as companies are able to demonstrate their commitment to become a tax-compliant, good corporate citizen.”

It is therefore recommended that businesses should streamline processes and put in place practical and easy-to-understand record keeping mechanisms within their organisations for proper filing of tax returns, documentation of ‘VAT on Sales’ and ‘VAT on Purchases.’

To thrive in this environment, businesses must be able to achieve successful digital adoption and reach a state where technology is an integral part of their organisations’ ways of working. As such, businesses, regardless of size and industry, must move towards shoring up their online presence and incorporate technologies to their business processes in order to stay relevant in such a landscape.

In the UAE, automating relevant business processes under the tax regime is vital to ensure VAT compliance. With a technology-driven accounting system, traders can effectively and smoothly collect VAT from the consumers and reclaim the same according to the provisions of the law. This process entails accurate VAT returns. It is important to note, however, that VAT-registered companies need to explore the most appropriate accounting software to make sure that the same fits their needs and meets all the requirements set by tax authorities.