30 May 2016: As the Gulf Cooperation Council (GCC) countries come closer to implementing the value-added tax (VAT), Partner and Head of Tax and Corporate Services at KPMG in Bahrain Mr. Craig Richardson stressed the importance of corporates' readiness to adopt this development that will lead to a significant change in the business environment.

To help companies navigate through these complexities, KPMG in Bahrain is organizing a VAT seminar on 5 June, 2016 at the Diplomat Radisson Hotel from 3:00pm - 5:00pm to discuss the imminent introduction of VAT and its' implications on the business environment in Bahrain.

The GCC countries are expected to sign the Framework Agreements to introduce VAT at a rate between 3-5% by the end of Q2, 2016. Draft legislation is then expected in the following months, providing practical guidance and executive regulations regarding the new VAT law.

"Once rolled out, VAT will affect sales of goods and services in Bahrain with limited exemptions and consumption tax relief. However, there will be a right for businesses to claim a credit for VAT paid on their expenditures relating to their business activities. Therefore, it is important for businesses to start reviewing and considering their business models to offset this anticipated change", Richardson added.

Although the implementation of VAT will increase the cost of doing business, revenues gained from VAT will be ploughed back into the economy. This will also contribute to enhancing the overall business conditions, while maintaining the country's position as a business friendly hub.  

Bahrain has long been considered an attractive low-tax environment, especially for business looking to invest in the Northern Gulf region. Generally, the introduction of a broad based VAT at a low rate is unlikely to deter investment into Bahrain, or the GCC Region. The appeal of the Region stretches much further than its low-tax status. Infrastructure development, access to high-potential growth markets in Africa and Asia, free-trade zones, competitive labor costs, few trade barriers, no exchange controls with USD pegged currencies, as well as economic and political stability, are all factors to be considered.

Richardson also confirmed that the implementation of VAT at a low rate will not have a recurring inflation impact unless the VAT rates are increased. Some businesses may choose to absorb the VAT cost, wholly or in part, to limit the impact on consumers.

For registration for the seminar, which will be free of cost, please contact Khalid Seyadi on email: kseyadi@kpmg.com

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About KPMG
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 162,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

About KPMG in Bahrain
KPMG Fakhro in Bahrain is a member firm of KPMG global network of firms.  Established in the Kingdom of Bahrain in1968, the firm has been growing in stature and reputation ever since.  KPMG Fakhro provides audit, tax, and advisory services to a wide array of clients operating in different sectors in Bahrain.

For further information, contact:
Afrah Faraj
Marketing Manager, Markets
T:  +973 17201495
F:  +973 1722 7443
afaraj@kpmg.com

© Press Release 2016