The Ministry of Finance, Bahrain has issued the press release and social media posts that confirms the introduction of VAT in Bahrain from 1 January 2019 and staggering the registration of VAT for businesses in Bahrain. Based on the annual turnover, the businesses are to obtain their VAT registration done as follows:
Bahrain VAT registration dates
The large businesses having turnover more than BHD 5 MN are obligated to register by 20th December 2018 and so they need to assess immediately the preparedness of VAT implementation. At the same time, based on supply chains and procurements, the small and medium scale businesses also need to assess their need for voluntary VAT registration. The MoF Bahrain and the National Bureau of Taxation (NBT) invited the audit and tax advisory firms for an interactive session on the implementation of Value Added Tax (VAT) in Bahrain and confirmed the same.
- For businesses having turnover more than BHD 18750, NBT is willing to grant voluntary registration from January 1, 2019, if the businesses wish to apply for the same.
- Non-Residents doing businesses in Bahrain are allowed to register on their own without the requirement of any Tax representative, and the registration needs to be done from the first supply post 1 January 2019.
- The decision on whether the option of Tax group registration to be made available from 1 Jan’ 2019 is yet to be clarified by the MoF.
- The portal for VAT registration is to be operational within a few weeks, and the documentation requirements for registration are to be released soon by the National Bureau of Taxation.
- The turn over for the registration purpose is inclusive of the taxable turnover (5%/zero rated) and the turnover on which VAT is payable/to be accounted for under reverse charge (import of goods/services).
Rates and policies
The GCC Value Added Tax agreement signed by 6 GCC (Gulf Gulf Cooperation Council) member states have agreed to apply VAT on most supplies of goods and services at a standard rate(5%) or at zero rate (0%). The basic rate 5% applies to the value of goods and services and the taxable owners may refund the input tax paid on these goods and services. While considering the case of zero percentage (0%) rate, the final customers will not be taxed but the taxable owners may refund the input tax paid on the goods and services.
With the introduction of tax exemption policy, the tax is no longer imposed on the end consumer and taxable business owners registered with the system can not refund the input tax paid on those goods and service.
VAT Periodic Returns
The tax returns are to be filed before the month-end following the tax period. The tax periods shall be different for filing VAT returns. The tax periods and the due dates for filing returns and the return filing obligation of taxpayers can be made more clear with the following table.
Bahrain VAT Taxes
Taxable supplies at Zero percent
The transactions and sectors on which zero percent tax are to be imposed include:
- Basic foodstuff
- Real estate- Construction of new buildings
- Health sector- Medicines and medical equipment
- Oil and gas sector and its derivatives
- Local transport
The tax exempted supplies include certain goods and services in the following sectors:
- Rent or sell real estate
- Financial services except commission or trade discount imposed by financial institutions and payments as an express fee.
E-invoicing and tax payment
Businesses can make use of digitalized invoices to experience time-saving invoice processing and increased competitiveness. Electronic invoices are a remarkable choice for businesses to reduce the overall costs of the invoicing process. Use a software like Clickfew for easy invoicing and then hassle-free tax payments.
Other useful information
An email helpdesk (firstname.lastname@example.org) and a hotline (80008001) have been set by the Ministry of Finance to provide further clarifications on the same. The taxpayers can also make use of the dedicated call center to communicate with the tax authorities.
In the case of large taxpayers, dedicated relationship managers will be assigned to them to make things easier.
VAT readiness tools will be provided to the taxpayers to help them to be aware of how ready they are and what are the areas on which they need to focus more on.
The Ministry of Finance and the NBT have plans to organize sessions and events aimed at increasing awareness and education about VAT.
Executive regulations are to be released soon and the documentation procedures are undergoing changes in order to be aligned with VAT.