Tax Reforms in GCC, 2018 VAT Implementation 14th August 2017

We look at your business as a whole and examine how it may be impacted from a VAT perspective in key dimension of technology and in respect of three key challenges: organizational, operational and financial. Julia Stolyarova, Director ” August 2017

VAT Project Implementation Operating VAT VAT IT Services on the Cloud

VAT Project Implementation Operating VAT VAT IT Services on the Cloud

Introduction to Tax Reforms in the Middle East Operating assumptions Traditional VAT system similar to EU Cross-border reporting Low rate Limited exceptions 6 Countries Common agreement on major principles GCC Economic Agreement Domestic implementing legislation allows for tailoring Customs Union Applicable to most goods and services

Answering (almost) every question Need not learn everything but… The ‘W’ Issue Who Who is the supplier, and who is the customer? Are either party, or both parties registered? Is the supplier or customer overseas? Is it in the course or furtherance of a business? What? Is this a supply of goods or services? Is this one supply, or multiple supplies? Where? The place where the supply is deemed to take place determines which jurisdiction’s VAT laws apply and the VAT liability applicable (e.g. standard, reduced or exempt) When? When do I need to account for the VAT and/or recover the VAT as the case may be? In either case, what documentation do I need to satisfy the authorities? What value? The value question –VAT is determined by reference to the value of the supply, the nature of the supply and the rate applicable to it 1 Learn the 5 “W’s” Get to grips with common terms 2 3 4 5

VAT Fundamentals: Error and Penalties VAT returns submitted periodically together with payment Normally three months or monthly, but we don’t know yet! Authorities sometimes have discretion to accept alternatives VAT return submission and payment determined country by country Electronic VAT return submission and payment possible in most countries Additional reporting requirements could arise for intra-GCC trade Incorrect, incomplete or missing VAT returns = Tax authority estimation Penalties for errors or failure to file and/or pay likely, and likely to be significant

New pricing regime and new sales volumes Contractual arrangements Key Challenges New pricing regime and new sales volumes Contractual arrangements Impact on working capital requirements Staffing, training and technology Working with Authorities New Treatment of inter-company transactions

Who are the Stakeholders? Economics Owner Business Owner Technology Owner Financial visibility Informed decision making Financial and industry data Balance Risk: cost, time and security Customer Satisfaction Growing Revenue Productivity and efficiency Strategic business technology goals Better, faster, cheaper IT services Address risk

SAP Launch Implementation Approach Lead with best practices Rapid, prescriptive, repeatable delivery steps Accelerated by tools, templates and predefined content Agile approach Enabled for the cloud The SAP Launch methodology is optimized for the cloud and varies from traditional consulting approaches. Instead of being consultative and building a full solution based on customer requirements, we lead with experience. Our experience of over 10,000 cloud implementations has allowed us to define a methodology that is built on the best practices of our solutions and implementations, using tools and templates that are proven effective. This prescriptive, repeatable process enables us to rapidly configure, test and launch our cloud solutions with our customers. By using SAP Launch as our implementation methodology, we help to ensure project efficiency and customer success. Consultative approach Highly customized solution Development, not configuration Time consuming and costly

SAP Launch Project Implementation Methodology Consulting and iterative methodology with 4 distinctive stages Prepare Realize Verify Launch Internal Kick Off Project planning and resource budgeting Project team orientation Kick Off meeting Requirements gathering Workshops Configuration / Requirements Refinement Data Migration Custom Reports Data Imports/Exports {integrations} / Extensions / Technical Developments Integration Testing User Acceptance testing Go-Live Training Go-Live Planning Cut Over plan Customer Success Transition Go-Live Support Project Close-out Scope and Project Readiness Configuration Acceptance Integration testing Acceptance Production Readiness Acceptance

Quality Gate Objectives There are four Quality Gates, also called Q-Gates, executed during the implementation in order to ensure project success. All stakeholders agree to the scope to be delivered during the implementation of the SAP solution. When necessary, a change order is executed. Verification Project  All stakeholders agree that the business scenarios demonstrated in the solution meet the requirements to be delivered by the project and that all configuration questions have been addressed. Acceptance Solution  All stakeholders agree that the systems, data and people are ready to execute the cutover from the legacy system(s) to the new system(s) . Acceptance Readiness  All stakeholders agree that the cutover is complete and the organization is prepared to use and support the new solution. Go-Live  Now that we’ve reviewed the deliverables for each Quality Gate, let’s summarize the objectives. The first Q-Gate, Project Verification, ensures that all stakeholders agree about the implementation project scope. At the end of the Realize phase, the Solution Acceptance Q-Gate confirms that all stakeholders agree that the demonstrated business processes meet the implementation project requirements and that all configuration questions are addressed. The Readiness Acceptance Q-Gate is when all stakeholders agree that the systems, data and people are ready to execute cutover. Lastly, the Go-Live Q-Gate confirms with all stakeholders that the cutover is complete and the organization is ready to use and support the new solution productively.

Evaluation Prepare Realize Verify Launch Support 6 wks 6 wks 4 wks 3 wks

VAT Project Implementation Operating VAT VAT IT Services on the Cloud

Segregation of Duties IT Functional Specialist Tax Accountant Business Data Administrator Assign VAT Code IT Functional Specialist Tax Accountant Customer Services Clerk AR Invoice System Generated VAT Codes & Rates via configuration Reporting AP Clerk AP Invoice Auto + Manually Selected

VAT Project Implementation Operating VAT VAT IT Services on the Cloud

On Demand: per user, per month Input / Output VAT Reporting VAT IT Services Bundle: On Demand: per user, per month Input / Output VAT Reporting Staff Training Ongoing Support

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