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Bahrain: Update of VAT measures

Bahrain: Update of VAT measures

The National Bureau for Revenue provided guidance concerning certain value added tax (VAT) topics.

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The VAT guidance reflects the following:

  • Invoice requirements: Taxable persons must determine that the full address as per the VAT registration certificate is indicated on an invoice; however, certain relief may be available for invoices missing this information (but otherwise compliant) if received in the first quarter of 2019. Also, there may be relief available from issuance of a tax invoice for exempt margin-based financial services that are “zero-rated” (due to export conditions being met).
  • Rounding: Rounding of output tax amounts with regard to electronic transactions can be applied. The taxable base is to be reported on the VAT returns based on the rounded amounts. If there are differences between the taxable base as per the system records and the taxable base reported on the VAT return due to application of the rounding rules, records need to be maintained to explain the difference.
  • Input tax deduction on motor vehicles: Guidance is expected for purposes of determining the portion of input tax that may be deducted on expenses related to vehicles that are used both for business and non-business (personal) use. In the meantime, taxable persons are expected to maintain documentation as evidence for the basis of recovery.
  • Transfer of a going concern: Both the purchaser and the seller need to notify the tax authority within 30 days of the transfer. It is expected that a form specifically made for this purpose will be made available soon.
  • Bank statements: A bank statement may be used in some instances as a valid tax credit note or debit note.
  • Self-billing: A taxable person issuing tax invoices on behalf of a registered supplier under a self-billing arrangement may also issue a tax credit note in some instances,
  • Bulk post-supply discounts: A single tax credit note may be issued as long as the invoice numbers of all tax invoices are indicated on the tax credit note.
  • Correction of tax invoices: A tax invoice issued with respect to a standard-rated supply, but should have been zero-rated, can be corrected by cancelling the tax invoice and reissuing another proper tax invoice. Similarly, this process also applies when a tax invoice is issued for a zero-rated supply, but should have been standard-rated.
  • VAT grouping rules: The group’s taxpayer registration number must be used by a company that joins the tax group, and the company’s prior registration number will be considered to be dormant. There is no requirement to deregister.
  • Deferring payment of VAT on imports: An option for taxable persons to defer payment of VAT on imports will not be available in the near future.
  • VAT guides: Guides with respect to VAT and certain industry sectors (including transport, oil and gas, and food and retail services) are expected to be published on the tax authority’s website.

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