VAT Rate in Bahrain

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VAT Rate in Bahrain

VAT Rate in Bahrain

Bahrain is prepared to join the organization of VAT applying States in GCC from 1st January 2019. It will certainly be the 3rd GCC participant state after UAE and KSA to implement VAT. While the authorities are working in full swing to execute VAT on 1st January

2019, it is very crucial for companies to comprehend the VAT concepts and also as necessary preparations for it. In this article, we will certainly comprehend the structure of VAT Price in Bahrain.

The standard VAT price in Bahrain is 5%, levied on all taxable materials. The following is the framework of the VAT rate in Bahrain.

Bahrain VAT Rate Structure

Rate Type                                                                                               Rate of Tax

Standard Price                                                                                               5%.

Zero-Rated Material                                                                                     0%.


Excluded Supplies                                                                                         Nil.

As discussed in the above table, broadly the VAT price in Bahrain is classified into Criterion Price, Zero-rate and also Nil rate. The Conventional price of VAT at 5% will certainly be imposed on all the supplies disallowing a couple of which are either zero-rated or exempt from the VAT. The business signed up under Bahrain VAT are accountable to levy VAT at 5% on all taxed products and pay the VAT collected to the federal government.

In order to impose the appropriate rate of VAT on the supply of goods or solutions, it is essential for the businesses to determine the kind of products as well as establish the VAT applicability. The following actions will certainly help you to establish the VAT applicability and aid you to bill the best rate of the VAT.

Recognize the type of materials you are making– Supply of Goods or Providers.
Know the materials which are notified in regulation as zero-rated or exempted from the VAT.
Identify whether any one of your supplies is under zero-rated or exempt materials checklist.
If none of your supplies are under zero-rated checklist and excluded listing, it is comprehended that all your products are taxed supplies and also you need to charge VAT at 5%.
If a few of your materials are under zero-rated list or exempt list, except those, all others will be taxable products and also you need to charge VAT at 5%.
Materials such as export of goods or services, informed transportation solution of travelers, fundamental healthcare solutions and so on are zero-rated. Certain informed materials such as financial services, bare land, building and so on are exempt from Bahrain VAT. However, these go through the problems prescribed in Bahrain VAT law which is yet to be released.

In our next article, we will discuss on Zero-rated supplies as well as excluded supplies in Bahrain VAT.

The VAT is purchase based tax i.e. VAT is levied on every single transaction which is taxable. Hence, it is really critical for organizations to comprehend the goods or services they are supplying and identify the VAT applicability. With simply 6 weeks to choose VAT application on first January 2019, it is necessary to start this activity such that you are prepared in advance as well as prevent unnecessary confusion or consequence of non-compliance.

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