Bahrain Guide: What is Exempt and zero rated?

The list of goods and services that are notified under VAT in Bahrain that are exempt or zero rated.

1. Supply of Financial Services in Bahrain
   These kinds of supplies are exempt only when they are not conducted in return for an explicit fees, commission, and discount.
2. Real-estate Supplies in Bahrain
   The sale, lease or license of a real estate is an exempt supply (e.g., bare land). Accordingly, any VAT incurred on expenses or purchases (i.e., professional legal fees, refurbishment, etc.) that are attributable to the making of exempt supplies will not be recoverable by the taxable person.
   Note: Furniture, fittings, plant and apparatus that are not attached to land or a building and which can be removed without damaging the property are not considered as real estate.
3. Import supplies in Bahrain
    Imports of goods are exempt from VAT in Bahrain in the following circumstances:
   • Goods imported in Bahrain which is either zero-rated or VAT exempt if supplied locally in Bahrain.
   • Import of necessities and equipment of special needs, and the importer possesses the relevant documentation by the competent authorities.
   • Goods imported which are exempt from customs duties under Customs Law:
     • Diplomatic exemption
     • Military exemption
     • Returned goods
     • Import of personal or household belongings of Bahrain citizens
     • Import of personal effects and gifts accompanied by a traveler

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