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Bahrain brings in VAT

Bahrain has introduced five per cent value added tax for a trial period, to bring it into line with two other Gulf states that have already started applying the goods and services tax – Saudi Arabia and the UAE. The tax came in January 1, 2019.   During the trial, the Finance and National Economy Ministry of the state will be assessing the mechanisms for applying VAT, during which time it will hold a series of workshops for companies – including family entertainment centres – to raise awareness of the technical, legal and procedural aspects of the tax.  The country plans to introduce VAT in a staged manner, using thresholds. Businesses earning over BD5m (US$13.2m) should have been registered by January 1 and those with revenues over BD500,000 ($1.3m) and BD37,500 ($99,730) must be registered by July 1 and January 1, 2020 respectively.

Below those thresholds businesses are not required to register although they may voluntarily do so during 2019 but must have a threshold of BD18,750 ($49,860) to do so. Tax returns will have to be filed monthly for larger businesses but initially it may be acceptable to file three or four times in the year, depending upon the turnover.  Bahrain has some differences in the zero rated products and services, compared with KSA and the UAE. The country is expected to zero-rate basic food items, new construction work, education and healthcare, local transport and oil and gas. Also VAT will not be applied to some financial services such as the sale and lease of real estate. (2019/01/30)

 
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