The dawn of 2019 ushered a new beginning in the Kingdom of Bahrain. The Value Added Tax (VAT) went live on a similar pathas the Kingdom of Saudi Arabia’s, with a phased implementation.By 20thDecember 2019, all the businesses breaching the registration threshold need to register with the National Bureau for Revenue (NBR) and shall mark Bahrain’s full implementation of VAT in line with the Unified GCC VAT Treaty. On the contrary, the United Arab Emirates went full throttle on 1st January 2018.
Developing a new regime of taxation is always a challenge. Hiccups are part and parcel of every new beginning, but it takes spirit to take it head-onand overcome the hiccups. Bahrain’s industries had quite a few issues in the initial days, but thanks to the proactive approach of the authorities and their efforts in creating awareness.
Before rolling out the VAT Law, the tax regime showed its willingness for successful implementation by assessing the readiness of the businesses through the readiness assessment tool. The Bureau released timely general and technical Frequently Asked Questions (FAQs), guides, and clarifications for the assistance in compliance. The Bureau went on conducting numerous workshops at a frequent intervaland also made the call center facility available 24/7. User-friendly registration and return filing dashboard,email responses for queries, addcolors to smooth implementation.
The best part of the law and regulations was that a conscious effort was made to eliminate some of the uncertainties observed in the UAE VAT Legislations. For example. Transactions between the Branch & the head office is outside the scope of the VAT was clearly outlined in the executive regulations in Bahrain.
The tax group registration window is open now for corporate groups to form a tax group, and this shall help businesses manage cash flow within the group by filing one VAT return for multiple group companies in the tax group.Changes in registration requirements have also taken place throughout the year. Penalties for non-compliance with registration, incorrect Tax Invoices show seriousness on compliance of the VAT Laws. NBR is seeking the help of audit firms to follow up on the VAT registration and filing for their clients.
A new service line of Tax Consultants opened up, providing job opportunities to tax consultants across the nationalities. Innumerable tax firms have set up in Bahrain, benefiting from the UAE and KSA experience, catering to the needs of the Bahraini businesses. NBR is conducting initial inspections for VAT returns with refund position as well as nil returns, and the companies should expect full-fledged VAT audits soon. Tax Agencies are also expected to be allowed shortly, which shall further bridge the gap between the VAT registrants and the NBR.
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