09 October 2018 Bahrain Council of Representatives approves draft VAT law On 7 October 2018, the Bahrain Council of Representatives approved the Value Added Tax (VAT) draft law. The implementation date has yet to be confirmed officially, but it is anticipated that Bahrain will implement VAT from 1 January 2019. In December 2016, the Gulf Cooperation Council (GCC) Supreme Council approved the Common VAT Agreement of the States of the GCC (GCC VAT Agreement), outlining the framework that Member States should follow when implementing their domestic VAT rules. Saudi Arabia and the United Arab Emirates (UAE) implemented their VAT systems on 1 January 2018. Bahrain is to follow on 1 January 2019. The Bahrain Council of Representatives has now approved the draft VAT law. The next steps are for the Shura Council to approve the law, and then issuance of the Royal Decree by the King of Bahrain. It is expected that the Bahrain Gazette will publish the law and associated regulations in the following weeks. The Council of Representatives approved the GCC VAT Agreement, so the standard VAT rate will be 5%. There should also be potential reliefs for a number of sectors, including: The introduction of VAT in Bahrain will affect all economic sectors. Businesses may require considerable effort and action to update their people, processes, systems, contracts and stakeholders for VAT. For businesses accustomed to operating in a tax-free environment in Bahrain, VAT compliance requirements will require a fundamental change in many business practices. An implementation date of 1 January 2019 would not leave much time for businesses to prepare for VAT. Some businesses may benefit from lessons learned during the recent implementation operations in Saudi Arabia and the UAE. However, it is important for businesses to initiate their VAT preparations quickly to reduce the risk of non-compliance and penalties when the new rules are implemented.
Document ID: 2018-1999 |
