When Was VAT In Bahrain Introduced?

VAT in Bahrain was introduced on 1 January 2019. The VAT in Bahrain rate is 5% and applies to most goods and services, with some goods and services subject to a 0% rate or an exemption from VAT. VAT in UAE is a general consumption tax that will be levied on the majority of transactions of goods and services unless specifically exempted by the Law.  

VAT in Bahrain: Who comes under it and who is exempted

VAT in Bahrain: Registration and Timeline

A resident person must register for VAT if they meet any of the following:

The timeline for registration for businesses is based on the annual turnover in sales in the following:


If an individual’s supplies are all zero-rated, they can be exempted from mandatory registration upon request to the Authority.

Tax Returns

The duration of the tax period for a taxable person, which should not be less than one month. The start and end dates of each tax period will differ for each taxpayer. A taxpayer must submit a VAT return to the Authority by the last day of the month following the end of each tax period. 

VAT in Bahrain: Penalties

VAT in Bahrain: Legal Perspective

From a legal perspective, it was necessary to review existing contracts to check if they needed to renegotiate contracts that had no VAT clause in order to avoid bearing any VAT cost. They also had to check that all new contracts dealt with the application of VAT and set out which party was responsible for bearing the VAT liability.

 It was also important to communicate with suppliers to ensure they were going to issue VAT compliant invoices and businesses had to evaluate the cash flow implications and their working capital requirements as a result of now having to pay the VAT before they received payments.

VAT in Bahrain: Impact on Travel & Tourism Industry

The VAT for tourism operators can vary from business to business lot more complex than
operators may be able to feasibly handle. This complexity may drive some operators to make changes to the way in which they do business. Tourism operators will generally find that assuming they breach the threshold for being required to register for VAT, they will need to charge VAT on their fees. Even though a significant percentage of their client base will be tourists from offshore. The reality is that the authorities are likely to take the view that the service
is supplied in the respective GCC state, and that it should therefore be subject to VAT there.

Looking for a provider to manage your VAT Compliant Accounting in Bahrain?

When you choose the right VAT solution and provider, your travel business will not only just save time and money, it will provide a robust powerhouse of financial data that will help your organization respond to the ever-changing market conditions.

Systrix is a leading travel software automation provider which provides invoice automation solutions designed to maximize touchless,  processing, especially for travel businesses. For more details schedule a free demo today with us.

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