The Bahraini government issued Decree (48) of 2018 on Value Added Tax. Bahrain’s National Bureau of Revenue is the government agency in charge of implementing and managing VAT. The system is in charge of recording VAT registration Bahrain and related obligations and validating and evaluating submitted statements. In addition, the National Bureau of Revenue must reimburse the recoverable amount, collect any outstanding amounts, and conduct audits. Furthermore, the authority is in charge of reviewing and issuing decisions on grievances, as well as monitoring and implementing VAT compliance on an ongoing basis.
When purchasing any taxed goods or services, the final consumer must pay VAT. In turn, businesses pay the National Bureau of Revenue VAT collected from the final consumer and recover the added value paid to their suppliers.
Businesses in Bahrain are required to register for VAT if their annual taxable supplies go above the level determined by the National Bureau of Revenue, and smaller businesses may choose to register voluntarily. After registration, a VAT identification number is issued to the business and it must meet the requirements relating to invoicing, keeping records and submitting periodic returns. Failure to comply may lead to penalties, fines, or legal proceedings. Correct VAT registration ensures that businesses act in accordance with the law, keep accurate financial records and do not suffer disruptions to their operations, as well as allowing them to recover efficiently the VAT paid on qualifying business expenses.
VAT will not applicable for:
- Basic food items
- Basic medical services
- Passenger transportation
- The oil and gas industry
- International airline tickets
VAT registration Bahrain Services
There are two types of VAT registration Bahrain; before applying for VAT registration, businesses will select one category based on their annual turnover.
The VAT registration Bahrain categories are as follows:
- Mandatory VAT Registration
- Voluntary VAT Registration
Many factors should be considered by businesses before applying for VAT registration Bahrain processes, such as whether to apply for mandatory VAT registration or voluntary VAT registration. Another consideration is whether to apply for single VAT registration or a tax group.
If the total taxable sales from your business exceed a predetermined threshold by the National Bureau of Revenue of Bahrain, then you must apply for VAT registration Bahrain. There is a particular timeframe during which you are supposed to complete your VAT registration. Even if your sales fall short of that threshold, you may still voluntarily apply for VAT registration Bahrain. This is a common practice among many small businesses. Such a decision is made mostly by the desire to reclaim the VAT paid on expenses of your business, or in order to create an impression on customers and suppliers regarding its reliability.
As far as the ways of registration are concerned, there are two options available. They include registration of your business on a single-entity basis and registration as a Tax Group if there are several related businesses involved. The decision about which way to take depends greatly on the structure, ownership, and interconnection of different parts of your business. Thus, a careful consideration of all aspects of the problem would save you from breaking the law.
Each country has its own set of requirements for VAT registration. The VAT registration threshold varies by country for both mandatory and voluntary VAT registration.
Bahrain VAT Registration
- Mandatory VAT registration: Companies or individuals with an annual turnover of BD 37,500 or more in Bahrain must apply for VAT registration, according to the National Bureau of Revenue (NBR).
- Voluntary VAT registration: Companies or individuals with an annual turnover of more than BD 18,750 but less than BD 37,500 can apply for VAT Registration voluntarily.