Retail and Hospitality

VAT impacts different economic sectors in different ways. Retail businesses must assess the VAT treatment of “rebates” or monetary support from overseas principals for promotion of foreign brands/products in Bahrain as this may qualify as a supply of marketing services subject to VAT at the standard rate. Tracking of free products provided to employees and customers is essential to ensure that appropriate VAT is accounted for in cases where such giveaways qualify as deemed supplies. Hotels providing an exempt supply of foreign currency exchange to their guests or real estate rental services to F&B outlets should assess whether such supplies constitute their core activity which will impact their input tax recovery. Outsourcing the management of restaurants, clubs, etc. to third parties in a hotel while essentially continuing to own the operations may have VAT implications and therefore, close monitoring of revenue booking and robust internal controls are key for accurate VAT reporting.

Our retail & hospitality 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.