Bahrain publishes VAT Executive Regulations in Arabic

The long awaited Value Added Tax (VAT) Regulations (the Regulations) have been published in Bahrain. The only official version is currently in Arabic.

The Regulations provide the implementing guidelines for the Bahrain VAT Law, Decree-Law No. 48 of 2018 on Value Added Tax, which was published in October. The VAT Law refers extensively to the Regulations.

The VAT Law and Regulations will take effect on 1 January 2019, from which date VAT will be implemented in Bahrain.

Deloitte is currently in the process of producing an unofficial English translation of the Regulations, and this will be circulated once available.

Compliance obligations

The Regulations provide specific detail, expanding on the concepts and provisions introduced within the VAT Law.

The publication of the Regulations marks a critical development in the Bahrain VAT regime, and it is vital that impacted businesses ensure they are in full compliance of the requirements set out within the VAT Law and Regulations by 1 January 2019.

According to the National Bureau for Taxation (NBT), the Regulations provide taxpayers sufficient information to fulfill their VAT compliance requirements.  It is clear that the NBT will now expect taxpayers to be compliant.  Those that are not are at risk of penalties. 

The Bahrain government is adopting a more stringent penalty regime compared to both the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) on implementation of VAT in these jurisdictions from 1 January 2018 therefore businesses should not delay their implementation activities

Action to take

Although businesses (who are registered or are required to be registered) will have until 31 July 2019 to complete their first VAT return there are a number of critical activities that will need to be undertaken by 1 January. At a minimum, they will need to be able to issue VAT compliant invoices, particularly if they operate in the retail or B2C sector. In addition to this, businesses will need to understand their VAT obligations with respect to their supplier and customer contracts – this means whether the transitional rules apply or whether pricing adjustments may need to be made.

Deloitte is well-placed to provide comprehensive VAT implementation services to businesses in Bahrain. We have gained extensive experience by providing full-scale VAT implementation services to hundreds of businesses in the Middle East over the past three years, including many of the largest companies. Call us if you need help.