VAT Implementation
The Value Added Tax (VAT) Law in Bahrain has been published and confirms that VAT will be introduced in Bahrain on 1 January 2019. The Bahrain VAT Law differs from the VAT rules of the United Arab (UAE) and the Kingdom of Saudi Arabia (KSA), in particular around the zero-rating and VAT exemption provisions. The framework allows for a basic rate of VAT on supplies of goods and services of 5%, as well as allowing such supplies to be zero-rated or VAT exempt depending ultimately on the domestic legislation of each country. VAT will be calculated based on the consumption of goods and services.
Impact of VAT on Bahrain
Not only will the implementation of the Value Added Tax (VAT) in Bahrain change the structure of the small island's economy, but it may very well have numerous ramifications on its social, political, and legal fronts. A value added tax would help Bahrain deal with the major economic issues plaguing its economy.
VAT implementation in Bahrain
Bahrain introduced VAT from 1 January 2019. It is the third of the six Gulf Cooperation Council (GCC) member states to do so. This follows the 2016 Unified VAT Agreement for the GCC states, which established the basis of a harmonised VAT union across the states.