Q1: What is Value-Added Tax (VAT)?
A1: VAT is a consumption-based tax which is applicable on sales and imports of goods and services in Bahrain.
Q2: When will VAT be implemented in Bahrain?
A2: VAT will be implemented in Bahrain starting from 1 January 2019.
Q3: What is the applicable VAT rate?
A3: The applicable VAT rate is 5%
Q4: Does VAT apply to all banking services in Bahrain?
A4: The general rule is that VAT at the 5% rate is applicable on fixed fee charges such as issuance of cheque books, account opening fees, fund transfer fees, administrative fees etc. However, VAT margin based products are exempted from VAT such as interest on loans, bonds, lending etc.
Q5: I am a business. Do I need to register for VAT purposes?
A5: Businesses are required to register for VAT in Bahrain if the value of their annual taxable revenue exceeds the mandatory registration threshold (Please refer to National Bureau of Taxation’s website).
Individual persons are also required to register for VAT if they exceed that threshold.
Q6: How will VAT apply to NBB’s products and services?
A6: In general, NBB will charge 5% VAT on products and services payable through explicit fees and commissions.
For example, if the charge for the issuance of a replacement debit card is BHD 3, NBB will charge an additional BHD 0.150 on this fee as VAT (BHD 3 * 5% = BHD 0.150); hence, total amount to be paid by customer is BD 3.150
However, VAT to be exempted on interest due from clients’ loans.
Q7: Where can I go to obtain more information on VAT?