It marks the second phase of VAT rollout and businesses with turnovers exceeding BD500,000 have to register, with the consumption tax being applied on them from July 1.
The Ministers of Finance of the Kingdom of Saudi Arabia, the United Arab Emirates, the State of Kuwait…438 Views | the publication reaches you by | Bahrain News
VAT was introduced on January 1 for businesses with turnovers of BD5 million or more, while those with turnovers of BD37,500 and above still have until December 20 to meet the tax requirements.
Head of tax at Bahrain-based audit and advisory firm Keypoint, Mubeen Khadir, said he expected more than half of businesses in Bahrain to be affected by this Thursday’s deadline.
“Because Bahrain’s tax authority decided to stagger VAT implementation according to taxable turnover, we are going to see two further waves of VAT implementation here in Bahrain,” he said.
“Businesses with taxable turnover between BD500,000 and BD5 million, which must be registered for VAT by June 20, and then all businesses with taxable turnover above the mandatory registration threshold (MRT) of BD37,500, which must be registered by the end of this year.”
VAT registration for companies with turnovers below BD37,500 is optional.
S&P Global Ratings last month said it expected VAT to bring in the equivalent of one per cent of GDP.
“Though implementation will be gradual, we assume on average that VAT introduction could have a revenue-raising effect equal to about one per cent of GDP a year,” it said.
The International Monetary Fund (IMF) previously estimated the Bahrain government would net $568 million in revenues from VAT annually.
Speaking ahead of a seminar on the subject tomorrow, partner and head of enterprises at KPMG Bahrain, Harish Gopinath, said VAT did not necessarily spell reduced cash flow for small and medium firms.
“Small and medium enterprises play a key role in the economy,” he said.
“In light of the increasing market regulations, it has become more important than ever before to support their growth to enable the continuous growth of the local business community.
“VAT should not negatively impact operations or cash flow, if managed effectively.
“I believe this event (tomorrow) is an ideal platform to learn how effective leadership can help turn the new tax system into an opportunity to review and upgrade systems and processes, rather than a burden.”
VAT is being applied at a standard rate of five per cent on consumer goods, telecommunications services, clothing and apparel, hotels, restaurants and vehicles.
However, Bahrain is applying a zero-rate on basic food items, construction of new buildings, education and healthcare services, local transport services and the oil and gas sector.
Meanwhile, the sale and lease of residential and commercial real estate – as well as certain financial services such as loans – are exempt altogether.
Financial services provided for a fee, including account management, certain trade finance services and fund management, are subject to standard rate VAT.
Non-life insurance/reinsurance also qualify for standard rate VAT, but life insurance/reinsurance are exempt.
Mark Gamble, a senior leader of Keypoint’s tax team, said decision makers were still adapting to VAT.
“While many key decision makers in the UAE and Saudi Arabia have been lodging VAT returns for the last 12 months, their peers in Bahrain’s largest businesses have only just calculated and reviewed their first VAT return,” he said.
Details of VAT requirements are outlined on the National Bureau for Revenue website at www.nbr.gov.bh.
Global Experts in Leadership and Business Excellence will lead a powerful discussion focusing on improving organizational performance at…200 Views | the publication reaches you by | Bahrain News
Do you have information you want to reach our readers?
7 Action Movies You Can Not Miss In 2019