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 a 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.
|The turnover limit in BHD (Annually) should register||Deadline for Registration||The 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|
Any business having an annual turnover more than BHD 18,750/- may voluntarily register on the website of National Bureau of Tax anytime throughout the year.
Article 2 of the Bahrain VAT Law states that the supply of all goods and services by a taxable person in Bahrain shall be subject to VAT. The standard rate imposed is 5% while certain goods and services are 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.
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.
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.
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.
The Law describes the penalties that could be imposed for non-compliance. These include 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 with the regulations. Emirates Chartered Accountants Group believe that with a proper understanding of the law and implementing the regulatory practices in business will enable industries to brace the impact of VAT steadily. Emirates Chartered Accountants Group provides a wide array of TAX Services for all business sectors in the UAE, India, London and Bahrain. The Tax Team at Emirates Chartered Accountants Group engages professionals with relevant TAX experience in different sectors from different ends of the globe.
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