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What are VAT Rates in Bahrain?

VAT in Bahrain
Generating Invoices under UAE VAT Law

Bahrain implemented VAT on 1st January, 2019. The standard VAT rate in Bahrain is 5%, levied on all taxable supplies. The following is the structure of the VAT rate in Bahrain.

Broadly the VAT rate in Bahrain is classified into

  • Standard Rate
  • Zero-rate
  • Nil rate

The Standard rate of VAT in Bahrain at 5% will be levied on all the taxable supplies other than exempt and zero rated supplies.
In order to levy the right rate of VAT in Dubai on the supply of goods or services, it is important for the businesses to identify the type of supplies and determine the VAT applicability.

VAT Rates in Bahrain

Standard Rates

  • Refurbishment of existing buildings.
  • General insurance and reinsurance.
  • Cosmetic surgery and alternative medicine.
  • Supply of food by restaurants, coffee shops or caterers.
  • Hotels, car parking for less than a month.
  • Financial services provided for a fee, commission or discount.

Exempt

  • Financial services where the consideration is an implicit margin.
  • Sale and lease of real estate (residential, commercial and bare land).
  • Life insurance and life reinsurance services as well as the transfer of such contracts.

Zero Rated in Bahrain

  • Exports of goods and services.
  • Local transportation of goods and passengers.
  • International transportation of goods and passengers, and related services.
  • Supplies of international means of transport and related repair and maintenance services.
  • Supply and import of certain basic food items.
  • Services of construction of new buildings and certain goods supplied during construction.
  • Health care services and certain associated goods and services.
  • Educational services and certain related goods and services supplied by an educational institution.

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