Money & Business
Up close and personal:
The Bahrain VAT law
I
n 2017, all six member countries of the GCC region ratified the landmark GCC framework agreement on the deployment of value-added tax (VAT) in their respective territories. While the UAE and Saudi Arabia were the first countries to introduce the taxation system, Bahrain followed suit in 2019, applying the standard 5 per cent VAT rate - considered one of the lowest worldwide - on goods and services. The VAT introduction in Bahrain, however, differs as compared to the UAE and Saudi Arabia as it comes in three stages. Certain businesses are mandatorily required to obtain VAT registration, while at the same time allowing those that are exempted to register voluntarily. Hence, businesses are required to evaluate the value of
38
Gulf Insider February 2020
Under the law, larger businesses are required to register first and the remaining companies later. their supplies and check whether they are required to register under VAT. The VAT registration due dates are also different to ensure smooth implementation. Under the law, larger businesses are required to register first and the remaining companies later. Larger businesses with a higher
turnover - that is, the value of the annual supplies exceeds BHD 5,000,000 – were mandated to register last year, with the deadline set on the 20th of December 2018. For the second phase, businesses with the annual supply value exceeding BHD 500,000 were instructed to register from the 1st of January 2019 until the 20th of June 2019. For the third and final phase, all remaining business whose annual supplies exceed BHD 37,500 - the threshold for mandatory VAT registration - in the previous 12 months or will exceed BHD 37,500 in the next 12 months should obtain a VAT registration by 20th of December 2019. Non-resident businesses in Bahrain are also required to register under Bahrain VAT, irrespective of the value of their supplies, in case they make
