Bahrain officially implements 10% VAT

Bahrain officially implements 10% VAT

Bahrain officially implements 10% VAT

The 10 percent increase on Bahrain’s VAT has gone into effect on all goods taxable by law in the Kingdom, local media reported.

The increase comes two years after Bahrain started implementing a 5 percent VAT on taxable goods in a bid to curb the budget deficit and re-stabilize the Fiscal Balance Programme impacted by COVID-19. The VAT increase could contribute receipts of about 3 percent of the gross domestic product in the next few years, up from about 1.7 percent in 2021, rating agency S&P Global Ratings estimated.

Supplies that are subject to the zero-rate including basic food, construction of new buildings, oil and gas, healthcare, and education or exempt from VAT such as real estate and certain financial services will be unaffected. Non-taxable items include water, milk, meat and fish, oils, eggs, sugar and salt, infant foods, bread products, vegetables and fruits, coffee beans, tea and cardamom, and wheat and rice. Bahrain also exempted 1,820 government services from VAT.

Authorities said that imported goods on or after January 1st 2022 will be subject to the 10 percent VAT rate unless they are zero-rated or exempt from VAT. 5% VAT rate.

The Ministry of Industry, Commerce and Tourism closed yesterday 12 stores for not conforming with VAT requirements after visiting 161 shops in Arad District, Seef Mall Manama, Avenues Mall, Ramli Mall, Seef Mall Isa Town, City Center Mall. The inspection visits were in coordination with the National Bureau for Revenue. Judicial Control officers announced detecting 73 VAT violations and slapped fines up to BD10,000.

The Bureau said it is in the process of taking legal measures to refer the violating facilities, punishments of which may reach up to 5 years of imprisonment and fines equivalent to three times the evaded VAT.