Skip to main content

VAT implementation at Bahrain-are you ready?

The Kingdom of Bahrain (Bahrain) has enforced its Value Added Tax (VAT) Law under the Royal Decree No. (48) of 2018. The VAT will be implemented on 1 January 2019.
There are many differences in Bahrain’s VAT Law in aspects of key areas corresponding legislation introduced in Saudi Arabia and the United Arab Emirates (UAE) in that provides for more broader zero-rates as well as exemptions, with a unique view to balance a variety of socio-economic objectives.

Let us have a look at the background 

As of November 2016, the Gulf Cooperation Council (GCC) Member States has executed the Common VAT Agreement of the number of States belonging to the GCC (GCC VAT Agreement), which outlines the framework that Member States are required follow while implementing their domestic VAT rules. Saudi Arabia along with the UAE implemented their VAT laws as of 1 January 2018.

Bahrain has also released the VAT Law dated 9 October 2018 on their Official Gazette website. The Royal Decree has stated that VAT will be on implementation on 1 January 2019. The Implementing Regulations (Regulations) will be published shortly.

What are the highlights of the Law? 

The proposed date of implementation — Article 4 of the Royal Decree has stated that the Law will be enforced on 1 January 2019.

What is the Scope of the VAT law? — In reference with the GCC VAT Agreement, the Article 2 of the Law states that the goods and services supply that is made in Bahrain, along with the imports, are going to be under VAT law.

What will be the Rate of VAT? — Article 3 of the Law has provided a standard rate of 5% for the VAT, while many of the goods and services will be subjected to a zero-rate or will be exempted from the VAT.

Zero-rated supplies — Article 53 of the Law has set out many provisions where certain supplies along with sectors are subjected to the zero-rate of VAT (which is subject to all the satisfying conditions along with the procedures that are going to be outlined in the Regulations).

The sectors included under this section are

  • Oil and gas sector 
  • Food industry (based on a list approved by the Financial and Economic Cooperation Committee) 
  • Transportation sector (Both local and international) 
  • Construction Business 
  • Education industry 
  • Healthcare industry 
  • Instrumentation industry 
  • Trading industry 
  • Goods supply under the suspension of customs duty scheme 
  • Jewellery industry 

Exemptions of goods include 

  • Organisations offering financial solutions to businesses 
  • Real-estate businesses 
  • Goods supplied to companies where the VAT law is exempt or termed as zero-rated. 
  • Diplomatic and military exempted items 
  • Personal and household items that are sent to people living abroad 
  • Personal baggage along with gifts that are carried by the travellers 
  • The daily necessities concerned for people under special needs Implications 

The introduction of VAT in Bahrain will have its effect on all the economic sectors. Businesses will definitely require to make a considerable effort and action to update their people, business processes, implementation systems, business contracts, vendors and stakeholders concerned for VAT. Businesses that are accustomed to operating in a tax-free environment in Bahrain, VAT compliance requirements will demand a considerable change in the practices of businesses in Bahrain.

Businesses do not have much time as of implementation date of 1 January 2019 for the preparation of VAT. Many businesses will be benefitted from the quick lessons that are learned during the recent implementation exercises in areas such as Saudi Arabia as well as the UAE. However, it is still vital for businesses to initiate their VAT preparations in order to reduce the risks associated with non-compliance along with penalties when the new rules are being implemented.

effitrac offers you with an efficient VAT enabled ERP Software with which you can plan all the billing and accounting activities associated with VAT at Bahrain. Make use of our impeccable Billing and Accounting solutions with which you can make VAT compliant decisions that are required for your businesses. Be prepared in advance since you do not have much time left for VAT preparation in Bahrain. Contact us if you are interested to make a change in your business and move on effectively to VAT compliant business solutions in Bahrain.

<a href="https://www.bloglovin.com/blog/19684973/?claim=t6pm4vwk7mv">Follow my blog with Bloglovin</a>
Labels:
Location: Bahrain

Comments

Post a Comment

Popular posts from this blog

CRM Software for Sales and Marketing

CRM (Customer Relationship Management) is an activity by which businesses manage the relationship, interactions and task scheduling with leads and customers.  A CRM system is always helpful in companies for sales and marketing teams to know what their leads are up to, what is going to be the evolving trend in the industry and how do customers react to it. By having knowledge of this, business personnel will easily benefit from the ever-changing market scenarios. We have a few questions to ask CRM vendors. Let us see what the questions are and discuss the answers to these questions.  The CRM(Customer relationship management) Software can easily manage the customer related activities. It cannot manage the day-to-day activities of your business like ERP does. A CRM Software is in most of the cases limited to customer front. It is not actually a software through which you can carry out your inventory activities. It is a software which you can use to communicate with all your cust
6 comments
Read more

How can Accounts benefit from VAT enabled Accounting Software?

Running a business is an ardent task. Streamlining of business processes ensures that the business is run in a smooth and efficient manner. An Accounting Software is a must to automate all those time consuming and harder tasks. They will be able to perform their duties in an easier manner. A user-friendly Accounting Software will be capable of offering the required accounting aid to its users. The tedious tasks such as data analysis, managing inventory stocks and goods, generating invoices and sending reminders for due payments and bank reconciliation will become quite challenging with the advent of VAT. Your Accountants will not have any other choices other than pondering over the spreadsheets and fidgeting with it to match your bank records with the business transactions. We ran a campaign on LinkedIn and many users pointed out the disadvantages of using Spreadsheets. Mr Jeevanandham Gandhi pointed out that the spreadsheets are hard to manage and data security as the main drawba
2 comments
Read more

VAT enabled ERP solutions in Bahrain - effitrac Solutions

Are you still unfamiliar with the VAT compliances ? Are you in need of cloud-enabled SaaS / On Premise Application to manage your entire business processes under a single roof with a single login? If yes, we have got your back.  We effitrac Solutions UAE - with over 7+ years of industrial expertise, we provide VAT enabled ERP modules for all sectors serving over 10+ verticals. With the introduction of VAT, it must have been crucial for you to employ an agile business solution that can handle all your VAT related processes.    By engaging our 27+ modules for different operations such as Accounting , Inventory , Sales, Purchase, Asset , Manufacturing or Payroll , you can sit back and relax since efficient tracking of business processes become synonymous with your team.  These are the benefits you can avail by using our Software: Improved ROI     All-in-one On-Premise or SaaS solution for A-Z frontiers of your business     Increased productivity     Simple-to-use applicati
1 comment
Read more