What is a Feasibility Study?

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What is a Feasibility Study?

A feasibility study is conducted in order to determine the success and minimize the risks related to the project. When it becomes certain that the specific project could be carried out profitably, it is only then it could be implemented. The feasibility study is not merely a project research, but a framework or a plan on how to establish and run business successfully in the long run. A feasibility study contains five essential components including market research, financial research, management research, schedule determination and technical research.

 

The information you gather and present in your feasibility study will help you:

  • Identify all the things you need to have a functional buisness
  • Pinpoint logistical or other business-related problems and solutions
  • Develop marketing strategies to convince a bank or investor that your business is worth considering as an investment
  • Serve as a solid foundation for developing your business plan

 

What is a Business Plan?

If the feasibility study indicates that your business idea is complete, the next step is a business plan.  The business plan continues the analysis at a deeper and more complex level, building on the foundation created by the feasibility study. A business plan gives you an opportunity to find any weaknesses and reveal any hidden problems ahead of time.  It serves two purposes: first, it is an analysis of how well the business will work; and second, it is a written document necessary to obtain a loan.

Saudi Arabia Announces its VAT Regulations

Saudi Arabia’s Department of Zakat and Income Tax has recently published its Value Added Tax Implementing Regulations. Although regulations in other GCC countries may vary slightly, it is safe to assume that the overall VAT structure will be similar if not identical across all GCC countries.

Main Highlights

  • Companies with “Supplies” exceeding the “Mandatory Registration Threshold” will have to register with the Department of Zakat and Income and get a VAT Registration Number.
  • The VAT rate is 5%.
  • Related party transactions will be taxed at the fair market value of the transaction.
  • VAT payments will have to be made either monthly or quarterly depending on the annual value of taxable supplies.
  • In case of overpayments, refunds will be allowed for any amount of tax above 1,000 SAR.
  • Tourists and other “Eligible Persons” will be allowed to get VAT refunds.

Exempt Transactions

  • Business gifts under 200 SAR/gift. The maximum annual value of gifts for an entity is 50,000 SAR based on the fair market value of the gifts.
  • Financial services (conventional and Islamic) including:
    • the issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money;
    • the provision of any credit or credit guarantee;
    • the operation of any current, deposit or savings account;
    • financial instruments, such as derivatives, options, swaps, credit default swaps and futures.
  • Life insurance and reinsurance
  • Lease or license of Residential Real Estate (commercial real estate, hotels and inns are not included in this exemption)
  • Goods and services exported/sold outside the GCC
  • International transport of goods/passengers
  • Qualifying Medicines and qualifying medical equipment
  • The first supply of a gold, silver, or platinum with 99% purity by its Producer or Refiner

To many companies, the introduction of VAT will pose significant financial challenges. The accounting policies and infrastructure will all have to be adapted to the new requirements. H.A. Consultancies can provide both the financial expertise and the accounting infrastructure required to have a smooth and successful transition.

For more information, please don’t hesitate to contact H.A. Consultancies at any of its offices in Bahrain, Oman, Saudi Arabia, or Dubai.

 

Get ready for VAT

Value-Added Tax (VAT) is coming to the GCC in 2018. This will undoubtedly have a direct impact on business operations across the region. Is your business ready for the change?

What is VAT?

A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destination-based tax, where the tax rate is based on the location of the customer.

 

How to get ready for VAT?

1. Project Plan

Prepare a project plan and be aware that VAT is not just a financial project. It affects all transactions and touches every aspect of your business organization. VAT affects, finance, IT, human resources, legal teams and even inter-organization transactions. Finance and IT teams are the most concerned so they need to be updated to handle the VAT.

2. Impact Assessment

Impact assessment is a must to understand VAT and its commercial effects over your businesses, so then you can prioritize issues and prepare for the implementation. Impact assessment is a key step as it sets the foundation for the implementation. The assessment looks at its various effects on the organizational, operational and financial levels. Typically, an impact assessment needs between eight and 12 weeks to complete and that leaves a relatively short time, no more than nine months, to affect implementation.

3. Implementation and Design

After designing the new systems, you can start your implementation first by training your staff on the process requirements for VAT, then they can implement the necessary changes to systems, controls, reporting and governance. Based on the impact assessment, they need to develop a road map for identifying the changes required, understanding the scheduling requirements and planning for work. Implementing the changes across various levels in the organization usually starts with mapping the transaction footprint to understand the VAT obligations of the business. This should form the basis for making changes across different verticals in the organization such as IT, supply chain and human resources.

4. Testing and Registering

Test your business systems to ensure they are capable of compliance and reporting then you need to register for VAT. Businesses need to integrate the changes made into the operations and train relevant staff about their new roles and responsibilities to achieve the desired result. Testing the VAT system, processes and controls during a “live” phase is important to allow for the complete and accurate completion of the first VAT return.