With effect from 1 January 2022, the Kingdom of Bahrain has implemented a standard rate of 10% Value Added Tax (VAT). The National Bureau of Revenue (NBR) is the government entity in Bahrain in charge of implementing and collecting VAT. Certain goods and services will be subject to zero-rate (0%) VAT, while others will be VAT-free. VAT was first implemented in the United Kingdom on January 1, 2019. To begin collecting the 10% VAT, all entities or individuals conducting an economic activity independently to generate income and make annual supplies exceeding the mandatory threshold of BHD 37,500 must register for VAT and obtain a VAT registration certificate and a dedicated VAT account number.
As a large, small, or medium-sized business, you must register with the National Bureau of Revenue (NBR) to obtain a registration number and a registration certificate to begin collecting the 10% VAT. VAT will be a significant change for all businesses.VAT has a broad scope, and businesses must consider the impact of VAT on all transactions, as well as the potential impact on prices and margins.
Through a treaty signed by all member countries, the GCC countries have decided to implement Value Added Tax throughout the region.
When purchasing goods or services from a VAT-registered business, the end consumer bears the cost of VAT (VAT payer). In exchange, the VAT payers pay the NBR the VAT collected from the end consumer and recover the VAT paid to the suppliers.
Our VAT Specialists
Businesses face challenges when preparing for VAT, just as they do with any new legislation. We have a specialized team of VAT Consultants. Our VAT experts in the Middle East, as a team with global VAT specialists, advise and implements strategies to assist organizations in achieving their VAT obligations & liabilities for clients who don’t have a full recovery in VAT.
Our Strategy for VAT Services
VAT and indirect taxes are transactional, and complicated, and can have a significant impact on your bottom line. GSPU can assist you with VAT and indirect taxation throughout the entire business lifecycle, from the formation of your company to the detailed structuring of transactions and litigation support.
GSPU will ensure that all of your company’s functions are following Federal Tax Authority regulations (FTA). Our VAT Agents will ensure full VAT compliance, including proper VAT invoice format and timely filing of VAT returns, as well as a variety of other operations that will help you meet your goals.
GSPU has a team of professional and experienced VAT experts who will assist you in running your business smoothly by providing the best and most authentic VAT services. Our VAT experts will understand your business and assess the impact of VAT on it.
While VAT is not intended to be a business tax, collecting and remitting the tax to the government will incur significant compliance costs. There could also be cash flow consequences. To understand the impact of VAT, supply chains must be reviewed. VAT costs and accounting obligations must be identified to be addressed.
There are also implications for information technology systems. VAT adaptation will entail updating or upgrading ERP and IT systems, as well as interfaces, to correctly capture input and output VAT. Governance frameworks will also need to be reviewed and updated to ensure that policies, processes, and controls comply with VAT legislation and continue to do so.
Your company’s VAT readiness is determined by its size and the amount of VAT-able supplies it makes each year. The National Bureau of Revenue (NBR) provides small, medium, and large businesses with readiness steps.
- If your company’s annual VAT-able supplies do not exceed 3 million Bahraini Dinars, it is classified as an SME (Small and Medium Enterprise).
- If your company’s annual VAT liable supplies exceed 3 million Bahraini Dinars, you are classified as a large business.
As a VAT-registered business, you must file a VAT return detailing your business transactions that are subject to VAT sales and purchases. A VAT Return summarizes the value of a VAT payer’s supplies and purchases during the VAT period and shows the VAT payer’s Net VAT position.
VAT payers must file and submit their VAT returns through the NBR online portal.
If the NBR does not receive your VAT return within the specified filing period, the NBR may estimate your VAT return following Article (36) of the VAT law.
You can pay your company’s outstanding VAT dues online using the VAT Bill Payment Service or the Fawateer service. You can contact the National Bureau of Revenue with any suggestions or inquiries (NBR).