Introduction to VAT in Bahrain
1. Introduction to VAT in Bahrain
1st January,2019 is a red-letter day in the history of Bahrain. It’s the day on which VAT Law in Bahrain was introduced. ‘Vat Law in Bahrain’ was a buzzword among the businesses located in Bahrain. Businesses had the dilemma or doubted the implementation of Vat LAW in Bahrain but the VAT authorities have worked in full swing to ensure that VAT LAW in Bahrain is a reality on 1st January, 2019.
VAT Law in Bahrain On 9th October, 2018, VAT Law in Bahrain under the Royal Decree No. (48) of 2018 was approved and was released on its official website. The Bahrain VAT laws officially mentioned the implementation of VAT in Bahrain from 1st January,2019.
2. VAT Law in Bahrain
While the approval of VAT laws itself was a significant milestone in the process of implementing VAT in Bahrain, the following are some of the important VAT Laws in Bahrain announced by the VAT authorities.
- Finalization of VAT Regulations
- VAT procedures and related circulars
- Bahrain VAT Portal Readiness
- Opening registration in Bahrain VAT Portal along with the registration timelines
- Finalizing VAT return format and portal readiness
- Knowledge sharing user Guide on various aspects of VAT in Bahrain.
No Doubt! The authorities have worked in full swing by doing all that requires to implement VAT Law in Bahrain on 1st January, 2019.
3. Business readiness for VAT in Bahrain
VAT in Bahrain is a reality and it is important for businesses to start preparing in-advance and be ‘VAT-Ready’. Being ‘VAT Ready’ does not mean your readiness on the day you are required to be VAT compliant, it signifies about your prior reediness towards VAT.
First of which is about ensuring that all the financial transactions are recorded, and books of accounts are accurate and up to date. This is because, the books of accounts will act as evidence for minimum annual turnover threshold limit for registration and on this basis, either you will be mandated to register, or you can request for exemption from registration.
Secondly, VAT being a transaction-based tax, meaning on every taxable supply of goods or services, VAT at 5% needs to be charged and Vat bill is known as ‘Tax invoice’ needs to be issued from the first day. On the purchase side, you will be allowed to recover the VAT paid as Input VAT deduction. The net of VAT paid on purchases and VAT collected on sales should be paid to the government along with the VAT returns.
Thus, in order to VAT ready, businesses need to explore the best VAT Software which will not only help you to be VAT compliant tomorrow - when VAT is implemented in the country but will also help you transit seamlessly into the new VAT era.
Apart from the above, VAT impacts every function within the organization such as finance, supply chain, product pricing, sales, procurement, legal, commercial, logistics, HR etc. As a business, you got few weeks before implementation of VAT in Bahrain and it is important to use these in understanding the VAT fundamentals, educate your teams on VAT, study the possible impact on your business operation and make suitable changes to be VAT compliant from day one.
Educating and Informing the external stakeholders such as your vendors and customers about VAT and the subsequent impact on transactions is equally important in the process of preparing towards VAT.
Any lapse in your preparedness towards Bahrain VAT, may impact your credibility which you built over the period with your customers and vendors and will have bearing on your profitability owing to loss of Input Vat and hefty fines due to non-compliance.
4. Latest News on VAT in Bahrain
In this section, you can get to know the latest news on VAT in Bahrain. The following are some of the latest news on Bahrain VAT.
- In Month of June,2019, Nation Bureau of Revenue (NBT) announced Transitional VAT returns for 2019
- Different Return Filing Period for businesses based on the threshold of 5,000,000 BHD
- VAT Return Filing Period for 2020 Onwards was released through VAT manuals.
- VAT Return format is released by the NBT
- In the month of April,2019, National Bureau for Revenue (NBR) introduced a new electronic service to allow VAT payers to register their interest to attend upcoming VAT workshops by submitting a simple form at NBR portal.
- NBR announces the opening of a new VAT refund desk for visitors at Bahrain International Airport on 17th April,2019
- MOFNE signs contract with Planet Payment to build VAT tourist refund scheme on 20th FEB,2019
- Different Timelines for registering under Bahrain VAT based on turnover.
- What is VAT and how does it work?
- Who should register under VAT in Bahrain?
- VAT rate in Bahrain
- Tax Identification Number (TIN)
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