VAT Introduction
From the 1st of January 2019, the Kingdom of Bahrain has implemented the Value Added Tax (VAT) to certain goods and services through the Value Added Tax Decree-Law No. (48) of the year 2018 (VAT Law). The National Bureau for Revenue (NBR) is the government body responsible for the implementation and administration of VAT Law in Bahrain.
VAT is an indirect tax on consumer spending at a standard rate of 5% except certain goods/services, which are kept at zero-rated or exempt from VAT. VAT applies to the supply of goods and services made by a Taxable Person. A Taxable Person is a natural or legal person carrying out an economic activity that is conducted in an ongoing and regular manner independently for the purpose of generating income and who is registered or obliged to register for tax purposes in accordance with the laws of the Kingdom of Bahrain.
The calendar year starting 1 January 2019 is a transitional period for VAT purposes. The requirements for mandatory VAT registration are specified below:
Mandatory VAT Registration on or before 1 January 2019
Taxable Persons with annual supplies for 2019 exceeding or expected to exceed BHD 5,000,000 must be registered for VAT prior to the effective date of 1 January 2019.
Taxable Persons with annual supplies for 2019 exceeding or expected to exceed BHD 18,750 but lower or equal to BHD 5,000,000 may also register for VAT by the effective date of 1 January 2019.
Registration applications under this mandatory threshold must have been submitted to the NBR no later than by 20 December 2018.
Mandatory VAT Registration on 1 July 2019
Taxable Persons with annual supplies for 2019 exceeding or expected to exceed BHD 500,000 but lower or equal to BHD 5,000,000 must register for VAT prior to the effective date of 1 July 2019.
Taxable Persons with annual supplies for 2019 exceeding or expected to exceed BHD 18,750 but lower or equal to BHD 500,000 may also register for VAT by the effective date of 1 July 2019.
Registration applications under this mandatory threshold must be submitted to the NBR no later than by 20 June 2018.
Mandatory VAT Registration on 1 January 2020
Taxable Persons exceeding the mandatory registration threshold of BHD 37,500 for January 2020 (based either on a report of the past 12 months or forecast of the upcoming 12 months) must register for VAT prior to the effective date of 1 January 2020.
Registration applications under this mandatory threshold must be submitted to the NBR no later than by 20 December 2019.