BAHRAIN - VAT introduced in Bahrain
In furtherance of the Gulf Cooperation Council (GCC) Framework Agreement on VAT, the Kingdom of Bahrain is the third member nation to introduce VAT. Amid persistent speculation of its deferment, VAT was finally implemented on 1 January 2019, albeit in a phased manner.
Phased VAT implementation has been linked to the turnover of businesses and 1 January 2019 is the go-live date for Phase I (registration threshold BHD 5 million), while Phase II (registration threshold BHD 500,000) and Phase III (registration threshold BHD 37,500) are set to come into effect 1 July 2019 and 1 January 2020, respectively. This has given the majority of the business community in Bahrain enough time to adapt to the VAT regime and to consciously embrace the change. The National Bureau for Revenue (NBR) has reported there are nearly 2,000 VAT registered local and international vendors and this number is increasing as more businesses are opting for voluntary registration (registration threshold BHD 18,750).
In the run up to the go-live date there have been enterprising efforts by the NBR to ensure smooth implementation. Their efforts have included a dedicated VAT portal with a taxpayer lookup facility for verifying VAT registration status of businesses, guidance notes, and technical ‘FAQs’ for VAT awareness. In addition, the NBR is dedicated to organising sector-specific workshops/seminars for businesses along with offering prompt clarification on various VAT-related queries. In its endeavour, the NBR is aided by a recognized list of audit firms that can enable efficient VAT transition for businesses. BDO in Bahrain is listed among the audit firms licensed by the Ministry of Industry, Commerce, and Tourism to support businesses in their efforts to conform with VAT requirements.
In keeping with the overall objective of successful implementation of VAT, businesses now keenly await:
- Publication of sector-specific guidelines; and
- Implementation of a tourist refund facility to stimulate overall business growth.