Value Added Tax (“VAT”) rate change in the Kingdom of Bahrain
The Council of Representatives and Shura Council in the Kingdom of Bahrain recently approved the bill to increase the standard VAT rate from 5% to 10% effective 1 January 2022. This was followed by publication of the VAT Rate change Transitional Provisions Guide by The National Bureau of Revenue (“NBR”) highlighting the steps to be taken to implement the change in standard rate for VAT in the Kingdom of Bahrain.
As a part of our compliance with the VAT Law and regulations in the Kingdom of Bahrain, Bank ABC will apply the revised VAT rate of 10% in accordance with the VAT Law and the Transition Provisions Guide from NBR.
Implementation of Value Added Tax (“VAT”) in the Kingdom of Bahrain
The Ministry of Finance and National Economy (“MOFNE”) has recently published Decree-Law No. 48 for the Year 2018 promulgating Value Added Tax Law (“VAT Law”) in the Kingdom of Bahrain. The National Bureau of Taxation (“NBT”) under MOFNE has also published the Executive Regulations that determine the rules and procedures for implementing the VAT Law.
As required under the VAT Law, Bank ABC has registered with the NBT and the VAT Account Number of Bank ABC is 200000425500002.
Based on the VAT Law and Executive Regulations, Financial Institutions are required to apply VAT on explicit fees (transaction fees, loan commissions, commercial discounts etc.) charged as part of the business activities at a standard rate VAT (5%) for residents of the Kingdom of Bahrain. Interest and margin based financial services are considered as exempt for VAT purposes.
However, financial services provided to non-resident established businesses are subject to zero-rated (0%) VAT, provided that certain conditions are met.
Based on the above, as a part of our compliance with VAT Law and regulations in the Kingdom of Bahrain, Bank ABC will apply VAT in accordance with the VAT Law and its Executive Regulations effective 1 January 2019.
If you are also registered with the NBT for VAT purposes, kindly provide us with a copy of your VAT registration certificate to validate your registration and to include your VAT Account Number along with your official registered company name and address on tax invoices that can be used for your input VAT requirements.
VAT registered vendors are required to provide a valid Tax Invoice when goods or services have been delivered or rendered or upon receipt of any amounts in advance. The requirements of a Tax Invoice is outlined in the Executive Regulations. We require all invoices issued under the VAT regime and addressed to us to include our VAT Account Number as well as our official registered company name and address. Please note that invoices that are not compliant with VAT requirements in Bahrain as specified by NBT will not be processed from 1 Jan 2019 and this could delay payments/settlement of invoices.
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for any clarifications or further queries.