14-Dec-2023 Demystifying VAT in Bahrain: A Layman's Guide for Businesses

Introduction:

Have you heard about VAT? It's like a tax on certain things you buy and sell, but it's a bit indirect. Let's break down what this means, especially if you're running a business in Bahrain.

Understanding VAT in Simple Terms:

VAT is a tax added to certain goods and services at different stages before they reach you. In Bahrain, they started with a 5% VAT in 2019, and then in 2022, it went up to 10%. It's a way for the government to collect some money on various transactions for development of the nation.

Who Must Register for VAT?

If you have a business in Bahrain, there are some rules. You have to sign up for VAT if, in the past year, you sold things worth more than BHD 37,500, or if you expect to sell that much in the coming year.

When to Sign Up and Voluntary Registration:

If you hit that sales target, you need to register with the National Bureau for Revenue within 30 days. But you can also sign up even if you didn't reach that amount, just to make things easier. If your sales or expenses were more than BHD 18,750 in the past year or are expected to be in the next year, you can choose to sign up for VAT voluntarily.

VAT for Non-Residents:

If you're not from Bahrain but are doing business there, you need to sign up for VAT right when you start selling things. No waiting around – it's mandatory.

What if You Forget to Sign Up?

Forgetting to sign up can be costly. If you don't do it within 60 days after you were supposed to, you might get fined up to BHD 10,000.

Who Doesn't Have to Register?

If you're just a regular person and not running a business, you don't need to worry about VAT registration. The same goes for businesses that are too small or don't meet the rules for signing up.

Documents for VAT Registration:

When you sign up, you'll need to provide some documents like business certificates, proof of your first sale, financial reports, and some other documents to show you're doing things by the book.

Getting Help from APMH:

If all of this sounds a bit overwhelming, don't worry. There are people, like CA Pratik Mehta from APMH, who can help you figure it all out. Just give him a call at +91 80972 51277 or shoot him an email at pratik@apmh.in.

Conclusion:

In simple terms, VAT in Bahrain is like a little extra cost added to certain things you buy or sell. Following the rules and getting the paperwork right might sound a bit tricky, but with some help from APMH, you can navigate the world of VAT and keep your business running smoothly.