Staying on track for VAT in the GCC by Fergus Gilmore of Deltek
With the new tax demanding more compliance from firms, this legislation will have far reaching administrative and financial implications for many. Here, Fergus Gilmore of Deltek looks at some of the key considerations for ‘getting it right’ when it comes to the processing of VAT. He also offers some pertinent advice for built environment firms that want to continue to be successful in a changing industry. The following recommendations are based on Deltek’s 30 years’ experience of providing 22,000 global project-based businesses with the tools and systems needed to make business processes – including VAT tracking, project accounting, project management and reporting – seamless.
What are the biggest challenges for firms starting in January 2018 regarding the GCC VAT introduction?
I’d say a main challenge for businesses is one of perception. Many firms in the built environment industry, such as architecture and engineering (A&E), are concerned that the introduction of VAT will present additional difficulties and even contribute to the issues that much of the industry is already facing when it comes to managing increasingly complex projects.
However, at Deltek we can easily challenge this perception. In our experience, working with the right consulting and technology partners means that built environment businesses will find introducing VAT easy. In fact, implementing the right systems and processes makes responding to many ongoing industry challenges, delivering more complex projects, meeting tighter deadlines and protecting profit margins, easier. Proactive firms will always come out on top.
When it comes to the introduction of VAT, firms will need precision insight into the company-wide implications of this new tax legislation, so they can also stay competitive, and continue to manage and deliver profitable projects. Businesses will need to determine if it makes more sense to increase their prices to cover the costs or to absorb the five percent increase to attract more market share. This, however, will depend on the business’ wider strategy.
How should firms respond to these challenges?
Businesses are right to be concerned, however, with proper due diligence and planning as to how to deal with this legislative change, firms who deploy the right processes and tools can be agile to respond. A&E firms will need to ascertain if any new or existing systems are able to process VAT easily; help employees make informed decisions and support VAT compliance without overburdening staff.
If the A&E firm is a multinational business, it’ll need a system with the capability to work across different countries and currencies – some of which need to comply with VAT and others that don’t. The sophistication of the right technology will take away the administrative burden of this current change, and any that come in the future.
It’s also important for organisations to take the time to understand the potential impact this legislation could have across their business and projects as a whole. How will their clients respond to the introduction of VAT? How will charging VAT potentially affect your projects, from impacting profit margins to increasing risk from non-compliance?
The key here is being proactive, not reactive so that firms are prepared as we enter 2018.
What practical help should potential software and consulting services partners offer A&E firms?
There is so much added value that consultants and technology vendors can offer their clients when they are on the cusp of a fundamental change. In addition to vital firms doing their homework to make sure they are getting the best support, as I mentioned earlier, working with the right partners is also key.
At Deltek we are more than a software vendor. We work closely with our clients to map out and introduce the processes and systems that underpin robust project governance, mitigating risk, protecting profit margins and ensuring business success. We understand best practice and compliance when it comes to managing built environment projects, no matter where firms are in the supply chain,
and we help A&E organisations globally to adopt this in their organisation.
It goes without saying that we will do the same for our clients while they work towards introducing VAT into their business before next year.
What impact will VAT have on the global built environment landscape in 2018?
The good news is that opportunities in the GCC region for A&E firms should be plentiful next year. However, contracts will be won and lost based on, among other things, a business’s ability to demonstrate VAT compliance, making it essential that firms are prepared. At Deltek, we make sure our clients remain competitive by partnering with them to ensure that their systems and processes support the introduction of VAT and their wider business objectives in general.
As we move through 2018 it will become evident which firms have been proactive in their response to the introduction of VAT. The businesses that remain at the forefront of the industry will be those that not only have the right systems in place to manage VAT but that have thought more widely about the governance of their projects in general. They will fully understand what it takes to win, manage and deliver profitable projects. Those that don’t respond accordingly will find it more difficult to operate within the industry, let alone remain successful and profitable.
What is your one piece of overriding advice for A&E firms?
As previously mentioned, VAT compliance is only a small part of what it will take to succeed in the industry in 2018 and beyond. Projects are more complex, clients are more demanding and profit margins are difficult to maintain. A&E firms need to operate within a robust project governance framework to ensure that their projects, the lifeblood of their business, are successful.
My advice is that rather than view the changes and the introduction of VAT as an unavoidable headache, speak to a partner like Deltek to find out how you can tighten up your processes, modernise your business, remain agile and competitive, introduce a project governance framework and build a more profitable future for your firm at the same time.
Fergus Gilmore is the managing director of Deltek in the UK, central Europe and the Middle East. For more information, visit Deltek.com or get in touch: Infoeurope@deltek.com.