NBR issues FAQs on how to calculate the market value for the related party transaction

National Bureau of Revenue (NBR) has issued VAT Technical FAQs on “How to calculate the market value on a related party transaction”.  The FAQs aim to address practical challenges that are faced by the taxpayers on arriving at the market value of transactions typically entered into between related parties.  The VAT law mandates arriving at the market value of consideration charged for supplies between related entities in cases where:

1. The value of supply is lower than the market value; and
2. Where the customer cannot recover the input VAT in full.

The FAQs inter alia mention that in the absence of a fair tradeable price, the taxpayers should refer to the transfer pricing guidelines issued by the OECD to determine the arms length market price.

The details of the FAQs can be read by clicking the link  https://www.nbr.gov.bh/t_faq/9