VAT Is Coming To Bahrain In 2019 – Is Your Business Ready?

Companies supplying taxable goods or services in Bahrain must comply with new VAT laws from January.

The Kingdom of Bahrain will be the third Gulf Cooperation Council (GCC) member state to introduce VAT when it applies from 1 January 2019.

The UAE and Kingdom of Saudi Arabia were the first countries to implement the tax one year ago, and businesses there are still adjusting to the new obligation.

Alongside publishing its VAT law in early October, Bahrain agreed to the establishment of the National Tax Authority for Gulf Taxes which will manage, collect and control all types of taxes and related administrative fines through the application of local laws, regulations and tax regulations. Get a complete overview on our 12 December webinar: Register here to join the session live or access it later on-demand.

Key points to know about VAT in Bahrain

The VAT rate for Bahrain is set at the standard GCC rate of 5%, however a zero rate and exemption can apply in certain cases. VAT may also be suspended if imported goods are under a customs suspension.

Companies supplying taxable goods or services in Bahrain must register as set out in the GCC unified agreement:

where annual revenue is more than USD 100,000 those with annual revenue between USD 50,000 and 100,000 can optionally register voluntary registration is possible if expenses exceed the threshold. The voluntary registration option is designed for start-up businesses with no turnover to enable them to register for VAT.

Contracts signed to provide taxable supplies to the government sector should be treated as zero-rated supplies, even if they will be fully or partially submitted after the start of VAT in Bahrain. This zero-rating should continue until the contract renewal date, or 31 December 2022.

Zero-rated categories

A zero-rating allows businesses to reclaim any VAT they have paid on costs. A Taxable Person who makes only zero-rated supplies may request to be excluded from the Mandatory Registration requirement for VAT purposes in accordance with the conditions that will be stated in the Executive Regulations.

For Bahrain, these categories are:

Cross-border transportation of goods and passengers within the GCC and from/to the GCC Local transport Exports of goods or services out of implementing GCC states or non-implementing GCC states Gold, silver and platinum for investment purposes First supply after the extraction of gold, silver or platinum Supply of goods to areas under customs...