VAT in Bahrain

VAT in Bahrain

VAT in Bahrain: Bahrain is set to become the third Gulf Cooperation Council (GCC) member state to introduce a VAT system. The Bahrain parliament has voted to approve a draft law that will lead to the introduction of the new taxation system on January 1, 2019.

At the start of 2018 new VAT systems were introduced in Saudi Arabia and the UAE. Elsewhere in the Gulf reports suggest that Oman and Qatar could possibly introduce new VAT systems in early to mid-2019. The remaining GCC member state – Kuwait – is expected to do so over the next 18 months.

Back in June 2016, all six Gulf Cooperation Council (GCC) member states signed the Common VAT Agreement. It was agreed that each GCC Member State would introduce a VAT system at a rate of 5%.

As VAT has been introduced from scratch every supply of a good or a service provided in the course of business are in scope. This is not a specific law targeting foreign suppliers of digital services. However, the result is the same, non-resident digital service suppliers, with sales in the GCC Territory that introduce a VAT system, must register, collect VAT, and remit it to the relevant tax authority.

Bahrain will introduce a new VAT system on January 1, 2019.

Back in February 2018, Reuters quoted Bahrain’s Minister of Finance Sheikh Ahmed bin Mohammed al-Khalifa as telling a conference in the capital Manama that his Ministry will be “working with parliament on VAT and aim to have everything set up by the end of 2018.”

An August 2018 report, in the UAE daily Khaleej Times, the introduction date was predicted to be January 2019. This was later confirmed when Bahrain’s parliament approved the VAT agreement for introduction in January 2019.

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