Antecedents and consequences of automated VAT solution adoption in Gulf cooperation countries: the case of the United Arab Emirates

Abstract

Purpose

This paper aims to examine the antecedents of the Automated VAT Solution (AVS) and its eventual consequence on value-added tax (VAT) compliance costs among the small and medium enterprises (SMEs) in Gulf Cooperation Countries (GCC), with the United Arab Emirates (UAE) as context.

Design/methodology/approach

A quantitative research design was deployed through a survey of 576 SMEs in the UAE. The data was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM).

Findings

The findings revealed that technological factors (IT complexity and IT competency) and organizational factors (management support and size of SME) significantly influence AVS adoption. However, only consumer pressure was found to be significant among the environmental factors, and AVS adoption was found to have a significant negative effect on the VAT compliance cost.

Research limitations/implications

A lower coefficient of determination for the effect of AVS adoption on VAT compliance cost meant that there may be other accounting-related technologies that improve operational efficiency and process automation and, in the long run, lower the cost of VAT compliance. These technologies should be included in future studies.

Practical implications

The findings imply that the adoption of AVS among SMEs is highly desirable, as it reduces VAT compliance costs. Increased regulatory pressure by the UAE’s policymakers is also desirable to accelerate AVS adoption for enhanced cost reduction and revenue maximization from the perspectives of both the government and SMEs.

Originality/value

To the best of the authors’ knowledge, this study could be the first to expand the Technology-Organization-Environmental (TOE) Framework through the integration of determinants of AVS adoption and VAT compliance costs among SMEs in GCC countries.

Citation

Al-Hiyari, A., Kolsi, M.C. and Mas’ud, A. (2024), "Antecedents and consequences of automated VAT solution adoption in Gulf cooperation countries: the case of the United Arab Emirates", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-10-2023-0617