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Kingdom of Bahrain

Taxes in Bahrain & VAT | Simplified

Taxes in Bahrain & VAT | Simplified

The Kingdom of Bahrain remained free of taxes till 31-12-2018. From 01-01-2019 VAT was implemented. Except for VAT, there is no tax burden on Bahraini nationals, citizens, and corporations (except companies engaged in exploration, production, or refining of hydrocarbons which is 46% of the annual profit). 

VAT In Bahrain

The Kingdom of Bahrain was the last GCC country to implement VAT. To divert the country’s economy from oil resources the kingdom implemented its’ first-ever tax on individuals the “Value Added Tax” (VAT) on 01-01-2019. Initially the VAT rate was announced as 5%. 

VAT Rate in Bahrain:

From 01-01-2019 to 31-12-2021 the VAT rate in Bahrain remained 5%. As a result of the COVID-19 pandemic, the Kingdom raised the VAT rate. Since January 1st, 2022 the VAT rate in Bahrain is 10%.

Who should register for VAT?

National Bureau for Revenue (NBR) defined the VAT registration criteria on the basis of a business’s annual supplies (value of sales or/and services provided in a 12 months period). According to National Bureau for Revenue (NBR), the following is the criteria for VAT registration:

Annual Supplies in next 12 months VAT Registration Criteria
Less than BHD. 18,750 Not Eligible
Between BHD. 18,750 and 37,500 Eligible for Voluntary Registration
More than BHD. 37,500 Mandatory Registration

*Companies that anticipate their annual supplies of more than 37500 in the next 12 months must register for VAT. Otherwise, they may face penalties up to BHD 10,000.

VAT implementation dates in Bahrain:

Implementation of 5% VAT: From 01-01-2019.

Implementation of 10% VAT: From 01-01-2022.

Documents required for VAT registration in Bahrain

For VAT registration in Bahrain following are the required documents: 

    1. Copy of CR (eCertificate).
    2. Copy of e-Extract.
    3. Copy of applicant CPR.
    4. Audited financial report for last financial year (for companies more than 2 years old).   
    5. Monthly sales from the date of incorporation to date.
    6. Business plan with a clear forecast of next 12 months taxable, zero-rated, and exempt supplies. 
    7. Explanation of exempt and zero-rated supplies on company’s letterhead (if any). 
    8. Purchase and Sales invoices, contracts, and other supporting documents proving registration eligibility. 
    9. IBAN certificate or Bank Statement.
    10. Letter from company mentioning the contact person details such as Name, CPR, Phone & Email address.

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