The Bahrain VAT law was released on 09th October 2018, by the Ministry of Bahrain. Bahrain VAT is all set to be implemented from 1st January 2019 at the rate of 5%. The Executive Regulations for VAT in Bahrain is expected to publish shortly. All the companies in Bahrain with turnover exceeding BHD 5 Million annually must register with the Tax Authorities before 1st January 2019. As per the Ministry of Finance, all the companies with turnover of more than 5 Million BHD should register for VAT in Bahrain. That level of revenues will require firms to register with the National Bureau for Taxation (NBT), the entity in charge of managing the tax. Registration applications will be received until January 1, 2019.
Who should register for Bahrain VAT and by when?
|Turnover limit in BHD (Annually) should register||Deadline for Registration||Effective date of Registration|
|More than 5 million||20th December 2018||1st January 2019|
|Above 500,000 to 5 million||20th June 2019||1st July 2019|
|Above 37,500 to 500,000||20th December 2019||1st January 2020|
What is the turnover required to Voluntary Register for VAT in Bahrain?
Any business having an annual turnover more than BHD 18,750/- may voluntary register on the website of National Bureau of Tax anytime throughout the year.
Overview of VAT in Bahrain Decree Law
Article 2 of the Bahrain VAT Law states that the supply of all goods and services by a taxable person in the Bahrain shall be subject to VAT. The standard rate imposed is 5% while certain goods and services is subject to Zero rated or Exempt from VAT (Article 3 of Decree Law). As per the law, certain basic foodstuff and other basic goods and services are Zero Rated from VAT, in addition to a number of other goods and services mentioned in the Executive Regulations.
What does Zero Rated Supplies include in Bahrain VAT?
Article 53 of Decree Law gave the provisions for goods and services which are subject to Zero Rated. These include:
The Executive Regulations shall specify the terms, conditions and necessary measures for the application of the provisions of this Article.
What Supplies are Exempted in Bahrain VAT?
Article 54 to 56 of the Decree Law give the exemptions from VAT, which include:
The Regulations shall specify the terms and conditions and necessary measures to implement the provisions.
What are the records to be maintained for VAT purpose?
The Taxable Person shall keep organized records, Tax Invoices and books of accounts related to imports or Supply of Goods or Services and shall present these records, invoices or books to the Authority upon request. The Regulations shall specify the records, books, durations and terms and conditions for maintenance of these records.
What are the penalties for non – compliance of Bahrain VAT law?
The Law describes the penalties that could be imposed for non-compliance. These includes the penalties for failing to apply for registration, i.e up to BHD 10,000. The following violations could be treated as tax evasion according to Article 63 of Decree Law:
Value Added Tax or Tax in general, is an unaccustomed practice in the Kingdom of Bahrain and it will definitely induce the businesses to transform some practices followed conservatively to comply the regulations.
Why choose Alya Al Marzooqi Auditors for VAT Consultation Services?
We provide VAT (Value added Tax) Advisory Services in Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah & Umm Al Quwain providing clients with a wide range of TAX Services in UAE with accordance to the client’s business needs. VAT Experts at Alya Al Marzooqi Auditing are committed to provide the best VAT Advisory Service in the UAE to the clients in compliance with the rules and regulations of VAT in the UAE having their international experience in Taxation. The Tax Team at Alya Almarzooqi Auditing are professionally equipped with relevant industry experience from different ends .