Bahrain to implement VAT effective in January

 

Bahrain bags the third position among the GCC member states to introduce VAT. Based on the Unified Vat Agreement 2016, that was signed and agreed upon by all the six GCC countries, the Bahrain Parliament has approved the implementation of VAT in Bahrain by January 2019. Till now, the states of Saudi and UAE are the two states that have implemented VAT. The other GCC nations, Qatar and Oman are likely to introduce VAT in early 2019 or by mid-2019. Kuwait will be the last among them and more likely to implement the same by late 2019 or perhaps by 2020.

An early preparation strategy would help businesses to face the challenging introduction of VAT in the Bahrain local market. Businesses are thus suggested to make proper assessments regarding the various aspects such as price strategy and operations, to be prepared enough and to be aware of the implementation of the VAT. “ With the implementation of an expected rate of 5% VAT, the GCC countries will produce over $25 billion per annum in the coming years’’, says the VAT implementation leader, David Stevens of EY.

Here are some of the rules that will apply to supplies during the introductory period:

For the payments and invoices made prior to January 2019 for the contracts to be supplied post implementation of the VAT, the VAT, in this case, is considered due and so a debit note indicating the correct VAT on the original invoice should be submitted.

Goods supplied to the VAT implemented GCC states will be considered as exports. The introduction of zero rate reverse charge supplies is an included plan to eliminate import VAT.

For the contracts made prior to January 2019, the price will be inclusive of the VAT charges.

However, the proposed taxation laws are expected to be similar to that of the UAE and KSA for international tax transactions.

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