VAT Obligations
Written in plain language for general understanding. This is educational content, not legal advice. Based on Bahraini national legislation, decree-laws, and ministerial orders.
Bahraini National Law
What is this right?
Bahrain introduced Value Added Tax (VAT) on 1 January 2019, initially at 5%. The rate was increased to 10% on 1 January 2022:
- Standard rate: 10% on most goods and services.
- Zero-rated supplies: Certain items are taxed at 0% — basic food items, certain medical supplies, international transport, newly constructed residential buildings (first supply), and exports.
- Exempt supplies: Some services are exempt from VAT entirely — certain financial services, bare land, and local passenger transport.
- Registration threshold: Businesses with annual taxable supplies exceeding BHD 37,500 must register for VAT. Voluntary registration is available above BHD 18,750.
- Filing: VAT returns are filed through the National Bureau for Revenue (NBR) portal, typically on a monthly or quarterly basis.
When does it apply?
- You run a business in Bahrain with taxable supplies above the registration threshold.
- You are a consumer paying VAT on purchases and want to understand what is and is not taxed.
- You import goods into Bahrain (VAT applies at the border).
What should you do?
- Register for VAT through the NBR portal if your business exceeds BHD 37,500 in annual taxable supplies.
- File returns on time — late filings attract penalties.
- Keep accurate records of all sales and purchases for at least 5 years.
- As a consumer, check that businesses display VAT-inclusive prices and issue proper tax invoices.
What should you NOT do?
- Do not ignore registration obligations — operating above the threshold without registering leads to penalties and back-assessed tax.
- Do not charge VAT if you are not registered — this is a violation.
- Do not discard invoices and receipts — you need them for input tax deductions and audits.
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