{"id":3591,"date":"2019-05-22T07:45:54","date_gmt":"2019-05-22T07:45:54","guid":{"rendered":"https:\/\/www.weetas.com\/insights\/?p=3591"},"modified":"2019-06-10T08:11:42","modified_gmt":"2019-06-10T08:11:42","slug":"value-added-tax-bahrain","status":"publish","type":"post","link":"https:\/\/www.weetas.com\/insights\/en\/value-added-tax-bahrain.html","title":{"rendered":"Value-added Tax in Bahrain: everything you need to know"},"content":{"rendered":"

Value-added Tax in Bahrain: a countermeasure to the oil prices crisis<\/b><\/h3>\n

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It is no secret that the Kingdom of Bahrain and all of the Gulf Cooperation Council (GCC) countries in general have been probably impacted the most by the oil prices downfall back in 2014; this is because the Gulf Countries depended heavily on the oil industries in developing their economies for a long time. In the aftermath of the oil prices\u2019 crisis, several measures have been taken to diminish the negative impact of the crisis, including levying the Value-added Taxes (VAT). The beginning of this year witnessed the levying of Value-added Tax in Bahrain.<\/span><\/p>\n

What is the Value-added Tax?<\/b><\/h3>\n

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Unlike the direct sales taxes, VAT is an indirect tax levied on each single stage of producing and distributing a product individually; it is currently levied in more than 160 countries around the globe with percentages that vary between 5% and 15%.<\/span><\/p>\n

How is the value-added tax levied in the GCC?<\/b><\/h3>\n

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In 2016, the Gulf Countries have signed a Unified VAT Agreement according to which the six member states commit to levy a 5% VAT, though the range of the products to be included or excluded from the agreement is to be determined by each state individually.<\/span><\/p>\n

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The signed agreement listed three different tax rates to be levied:<\/span><\/p>\n

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1- Basic Rate:<\/b><\/h4>\n

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the 5% tax rate to be levied on products and services. Registered business owners can reclaim their <\/span>input value-added tax <\/b>(the tax paid by registered business owners for the provision of their goods and services).<\/span><\/p>\n

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2- Zero Rate:<\/b><\/h4>\n

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In this case, the final consumer will not pay additional value-added taxes on the product they purchase. However, the owners of VAT-registered businesses can still reclaim their input value-added tax.<\/span><\/p>\n

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3- Exemption:<\/b><\/h4>\n

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Goods and services that are exempted from the value-added tax in Bahrain. The difference between exempted goods and zero-rated goods is that, in case of exemption, businesses providing the goods are not required to be tax bureau-registered and, if they are, they cannot recollect their input VAT.<\/span><\/p>\n

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The Kingdom of Bahrain comes as the third Gulf Country to levy the VAT, after both the Kingdom of Saudi Arabia and the UAE have effectively levied it at the beginning of 2018. <\/span><\/p>\n

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In the following link, you can read more on the effect of the <\/span>value-added taxes on the Saudi property market<\/span><\/a>.<\/span><\/p>\n

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Which entities does the Value-added Tax in Bahrain apply to?<\/b><\/h3>\n

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Within the first six months of levying it, the value-added tax in Bahrain will be implemented only to companies that sells goods or services to the Bahraini citizens with an annual sales value that exceeds the $13m (BD5m) mark. In the second half of 2019, the scope of the tax will also include companies with annual turnover that ranges between $1.3m (BD500,000) and $13m.<\/span><\/p>\n

The last bracket of entities to be introduced to the VAT, on January 1, 2020, \u00a0are companies with annual sales value between BD 37.5k and BD500k.<\/span><\/p>\n

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Which goods and services will be subject to 0% VAT in Bahrain?<\/b><\/h3>\n

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The following supplies and sectors will have zero-rated VAT levied on them:<\/span><\/p>\n

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