VAT set to have major impact on cross border regional transactions


Saudi Gazette

—Experts in the concluding session of the two-day Saudi Trade and Finance Summit (STFS) deliberated on a plethora of issues related to corporate houses and exports. But the highlight of the day was a presentation by Alhaitham Al-Ghothami, Economic Advisor at the General Authority of Zakat and Tax (GAZT), on Value Added Tax.

In his presentation Al-Ghothami admitted that VAT will bring in critical changes in the trade and industry of the country and will impact national, regional and even global economy. He called on business entities to make adjustments so that the changes occurred due to VAT implementation do not impact economy and businesses negatively.

He urged business establishments particularly Chief Financial Advisors and financial controllers to prepare for VAT implementation in advance so the when it comes into effect from January 1, 2018 there is no confusion and business and things move smoothly.

He said VAT is not a complicated provision and GAZT has made all aspects of VAT extremely clear. In addition, various leading audit and economic management companies have made detailed presentation on VAT implementation at leading corporate houses. They are also offering consultancy services for smooth implementation and total clarity.

He agreed that VAT implementation will have major impact on cross border transactions in the region. All GCC member states are committed to impose 5 percent VAT from January 1, 2018. However, according to reports barring Saudi Arabia and the UAE, other GCC states are not ready to implement VAT from January 1.

Business analyst and experts agree that this might cause imbalance in cross border transactions and businesses. Implementation of 5 percent VAT will raise cost of living in the region by five percent. But experts believe that it will not have any negative impact on business and will surely give a boost to national economy.

During the final leg of the summit, a panel discussion led by Anjum Noman Mirza, head of trade finance sales and solutions at Banque Saudi Fransi, Abdullah A. Al-Abdullah, head of trade finance solutions and Zishan Iqbal Muhammad, head of sales and client management global trade and receivables finance at SABB, focused on mitigating trade risk and optimization of cash flow through trade finance solutions.

In his paper Mirza reviewed the current economic climate in the Kingdom and its effects on trade risk and cash flow management. He presented a general view of bankers and corporates on importance of trade solutions for CFOs and treasurers.

Hani Al-Maskati, editor and publisher of Cash and Trade Magazine, was moderator of the session.

There were also few round table discussions dealing with relations between banks and corporate houses; modern trade finance; and means to manage liquidity and cash flow.

After the closure of the final session, an award ceremony was also held in which various awards were presented to CFOs.

Ahmar Azam, CFO of Leejam Sports Company made closing remarks and thanked all the participants and sponsors. The event was hosted by QNA International in cooperation with International Chamber of Commerce, Saudi Chapter.