VAT impacts different economic sectors in different ways. Family businesses in Bahrain must assess their group holding structure and evaluate whether it is beneficial for them to apply for a group VAT registration comprising of various entities under common ownership for efficient working capital management. Family investment offices should assess the VAT treatment of different revenue sources (whether from local or offshore investments) such as dividends, interest on debt securities and gains on sale of shares or foreign currency. Given the mix of supplies for a family investment office, it is essential to assess and classify expenses for input tax recovery purposes. This should be done with the objective of mitigating the risk of excess input tax recovery while reducing any input tax credit leakage. For transactions between different entities with common ownership, the valuation for VAT purposes must be examined as the related party valuation provisions may apply and the transaction value adopted for VAT purposes may be challenged by the NBR if it is lower than the market value of similar supplies.
Our family business VAT specialists will assist you to navigate through the complexities and challenges by providing the right advice with practical solutions to the challenges faced by this sector.