Bahrain Guide: What is VAT Law?
In October 2018, Bahrain Ministry of Finance (MoF) has released the Executive Regulations of VAT law. The regulation clarifies some details regarding VAT implementation and includes:
- Compliance Matters.
- The scope of zero rated supplies.
- The scope of Exempt supplies.
Important take-away from the regulations issued are:
- Non-residents may appoint a tax representative for all their tax related requirements and duties in Bahrain.
- For telecommunications and electronic services, if the customer is unregistered, the place of supply is determined by the place of use and enjoyment of services, at the date of supply
- Details provided on the exemption for financial services.
- Life insurance, transfers of equity and debt securities will be exempt.
- General insurance and all other services where there is an explicit fee will be taxed at 5%.
- Large businesses will file tax returns on a monthly basis and all other businesses will file quarterly.
- The mandatory VAT registration threshold is BHD 37,500 and the voluntary registration threshold is BHD 18,750. Only businesses with turnover exceeding BHD 5 million are required to register with effect from 1 January 2019.
- VAT on imported goods will be payable to Customs prior to the release of goods.
- The zero rating for new buildings applies to construction services and certain goods and services supplied as part of the construction contract.
- Exporters meeting certain conditions may apply for a domestic reverse charge on certain supplies received from taxable persons in Bahrain.
- The zero-rating applies for the oil and gas sector.
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