GCC Indirect Tax Weekly Digest

Bahrain developments

Non-resident taxpayers may register for VAT without a Commercial Registration (CR) number

The Bahrain National Bureau for Revenue (NBR) has announced that non-residents who need to register for VAT directly may now practically do so.  Prior to this change, there was a requirement to either appoint a [fiscal] representative or it was possible to avoid using a representative if the taxpayer had a CR, which in turn would infer a local presence.  Many foreign taxpayers were therefore unable to register for VAT directly with the NBR as they had no presence in Bahrain through which they could gain a CR.

This is good news and is a good indication that the NBR is taking a pragmatic approach to making amendments to its policies, based on feedback from taxpayers.

The change brings the Bahrain non-resident registration policy in line with that in the United Arab Emirates (UAE), where a representative is not required and it is hoped that other GCC member states will consider similar, practical measures in their implementation models.

NBR adds details on taxpayer filing to website

The NBR has updated the taxpayer filing page on its website with details of the filing, submission, and payment process.

A schedule of filing deadlines is provided with corresponding tax periods and annual supply thresholds, with separate sections for tax periods in 2019 and those in 2020 and beyond. Further, a detailed description of each line item in the VAT return form is also included.

The NBR have advised that more details of the actual process of submitting the VAT return form to the NBR electronically will be provided closer to when the filing period begins.

NBR publishes English zero-rated food items list

The NBR has published the English version of the list of food items which are zero-rated for VAT. The list was previously published in Arabic.

Bahrain is the first Gulf Cooperation Council (GCC) country to apply Article 31(I) of the GCC VAT Treaty, which allows Member States to zero-rate certain agreed upon food items.

Businesses in the agriculture, wholesale, grocery, or restaurant industries will particularly need to take care to comply with the VAT rules and many of their supplies will need to be carefully assessed for the appropriate VAT treatment according to the criteria in the list.

Tourist Refund Scheme to be implemented in 2019

The NBR announced that the Ministry of Finance and National Economy has signed a contract with Planet Payment to begin work on the Bahrain Tourist Refund Scheme (TRS).

The TRS would allow visitors to Bahrain to recover a percentage of the VAT paid on eligible purchases made in Bahrain, and is expected to be implemented in 2019.

This follows the introduction of the TRS in the UAE in 2018.

UAE developments

Amendment to HS codes impacted by duty increase

Dubai Customs notified an increase in customs duty on imports of rebar and steel coils into the United Arab Emirates (UAE) on 16 January 2019 (CN 1/2019).  An amendment to this notice is now published in Customs Notice CN 2/2019. CN 2/2019 has adjusted the Harmonized System (HS) codes impacted by the rate increase, resulting in a change in product types impacted. 

The amendments are retrospectively effective from the date of the original duty increase, 17 January 2019.

Importers should review CN 2/2019 in detail and carefully assess goods imported into the UAE from 17 January 2019 to determine whether the correct duty rate has been applied. 

The increase in duty rates may have a significant impact on costs within sectors that use these products intensely.  Impacted importers should undertake a cost benefit analysis to determine ways in which this increase could be managed, for example through supply chain adjustments, preferential origin, exemption requests, or suspension arrangements.    

This digest is for information purposes only and should not be construed as advice. It does not necessarily cover every aspect of the topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.