VAT in Bahrain – An Introduction
The Kingdom of Bahrain (Bahrain) has enacted the Value Added Tax (VAT) Decree-Law No. (48) for VAT to be introduced from 1 January 2019 in line with GCC Unified Agreement for VAT, making Bahrain the third GCC country to implement VAT after the UAE and KSA.
The key features of the VAT regime in Bahrain are as follows:
VAT Registration and Tax Grouping
The mandatory registration threshold as outlined in the GCC Framework Agreement is BD 37,500. Every company or person carrying on an economic activity in Bahrain will have to estimate their expected annual revenue starting from 1 January 2019 to determine if they are required to register. The registration timetable will be based on the value of taxable supplies with larger taxpayers required to register first. The detailed timetable will be announced shortly.
Two or more legal persons liable to register for tax purpose in the Kingdom may be registered as a single tax group upon their request and after the fulfillment of the conditions and procedures specified by the Regulations. All members of the tax group would be jointly liable for the tax liabilities of that group.
No specific clarity on treatment of transational supplies made to non-government entities.
Per the Law, supplies to a Government entity may be zero-rated if the Contract is entered into prior to 31 December 2018. Such relief would continue up to the year 2023.
Fines and Penalties
Imprisonment for Tax Evasion
The Executive Regulations referred to in the VAT law are expected to provide further clarifications.
For any VAT or a Finance related query, please email us at firstname.lastname@example.org or call us at +973 16 55 5050
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Re/think is a boutique accounting, audit, advisory, regulatory compliance and tax advisory firm with offices in Bahrain, Dubai and Abu Dhabi (ADGM), focused on providing businesses of varying sizes with timely, proactive, and customized business solutions from start-up and early development to the latest stages of a business lifecycle.