VAT Registration in Bahrain-How to register for VAT Bahrain?
VAT Registration in Bahrain: The first compliance activity for all businesses in Bahrain is to register under VAT. The window for obtaining a VAT registration begins. Businesses must know about who is obligated to register under VAT. Certain businesses are mandatorily required to obtain a VAT registration. At the same time, there is also a provision to voluntarily register under VAT. In addition, certain businesses are exempted from registering under VAT. Let us understand the rules on who should register under VAT in Bahrain.
Who should mandatorily register under VAT?
A person who is resident in Bahrain should obtain a VAT registration in the following 2 cases:
- Value of supplies in the previous 12 months exceeds BD 37,500 or
- Value of supplies in the next 12 months will exceed BD 37,500
[stextbox id=’info’ color=’ff0000′ bgcolor=’fff200′]The mandatory registration threshold under VAT in Bahrain is BD 37,500.[/stextbox]
Note: A non-resident person in Bahrain must register under VAT, regardless of the value of supplies, if he/she makes supplies for which VAT is liable to be charged. The person can take registration either directly or through a tax representative.
VAT Registration in Bahrain: Who can voluntarily register under VAT?
A person can voluntarily seek a VAT registration in the following 2 cases:
- Value of supplies or expenses in the previous 12 months exceeds BD 18,750
- Value of supplies or expenses in the next 12 months will exceed BD 18,750
The voluntary registration threshold under VAT in Bahrain is BD 18,850, i.e. 50% of the mandatory registration threshold.
[stextbox id=’info’]Voluntary registration threshold: BD 18,750[/stextbox]
Businesses who take voluntary registration generally do so for the benefit of input tax deduction, i.e. the facility to deduct input tax (tax paid on purchases) from the output tax (tax collected on sales) and only remit the balance tax payable to the Government. This is a major benefit of taking a VAT registration. Businesses which don’t have a VAT registration will not be able to claim input tax deduction and the VAT paid on purchases or expenses becomes a cost. There are other benefits of registering under VAT, such as the ability to issue a VAT invoice and the credibility that comes with a VAT registration. Businesses whose turnover exceeds BD 18,750 but does not exceed BD 37,500 can decide on whether they would like to voluntarily opt for a VAT registration.
Who is exempted from registering under VAT?
A person who makes only zero-rated supplies can request to be exempted from registering under VAT. Some examples of zero-rated supplies are newly constructed buildings, export of goods to a non-GCC VAT implementing State, etc.
[stextbox id=’info’]Exemption from VAT Registration in Bahrain : Persons making only zero-rated supplies[/stextbox]