MANAMA: A new guideline has been issued for businesses and financial institutions to prepare for the doubling of Value Added Tax (VAT) from five per cent to 10pc, from Saturday.
The National Bureau of Revenue issued the guideline – VAT rate change transitional provisions guide – which states that with effect from January 1, 2022 the revised tax on goods and services will be imposed after the Amended VAT law was published in the Official Gazette on Friday.
“Effective date of the VAT rate change, the date on which the new VAT rate will be effective is January 1, 2022,” stated the guideline.
It explains that 5pc rate will be applied on standard rate supply (supply of goods and services) on contracts entered before December 24 – even if the supply is made on or after January 1, 2022.
However, this changes if the contract is made on or after January 1 then it will be subjected to 10pc levy rate.
“There will not be any changes to zero-rated and exempt supplies,” said the NBR on its website.
“These include 94 basic food items and more than 1,800 government services.”
The doubling of VAT is part of Bahrain’s Fiscal Balance Programme to improve the trajectory rate of the country’s public finance.
The government is expected to net up to BD490 million through full VAT implementation, though a conservative estimate of VAT revenues for 2022 has been pegged at BD288m.
This comes as the government aims to reduce the total deficit expected for 2022 from BD1.112 billion to BD823.528m.
© Copyright 2020 www.gdnonline.com
Copyright 2021 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (Syndigate.info).