February 20, 2019


While VAT has been implemented in the Kingdom of Bahrain, the businesses which come under the VAT threshold are eagerly waiting for every word from the finance ministry of the Kingdom of Bahrain. In each country where VAT is a functional tax levied from customers, there are some key factors which lead a government to put forward these type of tax to the customers and businesses. It is better to understand what a government expects and pre-assume from an administrative point on implementing VAT.
The government requires concluding the correct ‘balance’ between shielding consumer and supplier concerns!
The growing revenue planes, as well as saturation of internet / social media, is one of the reasons for the escalating level of consumptions across the world and making us a ‘consuming’ society! .Thus, in view of a starter of VAT, while supplier would like to increase the product/ service prices (sometimes even more than the actual VAT rate!), a consumer would want to see the prices remain stationary. Additionally, every time VAT is to be presented in the Country, it is not strange to notice that sellers increase the product/ service prices (sometimes even before the actual introduction of VAT!). Thus, if suitable measures are not taken by the authorities and if the customer is not well conscious / educated about VAT, then the susceptible customer could be defrauded by the seller in the name of VAT.
Given the aforementioned, to shield the interest of the customer, few of the VAT jurisdictions have organized the following approaches:
a. Detailed guidelines (particularly to banks, insurance entities) to not to upsurge charges.
b. Exhibited prices should be inclusive of VAT.
c. Presenting ‘anti-profiteering provisions’.
Given the aforementioned, it is most serious for Government as well as VAT Authorities to not only takes definite actions (such as specified above) but also to endow the end customers through reporting of VAT information.
Government Authorities want to comprehensively harmonize during VAT execution!
VAT, among other things impacts goods of daily consumption, real estate, imports etc. Typically, any Country, intending to introduce VAT, will have separate Authorities which are managing/ responsible for prices of essential goods, transfer/ registration of real estate (such as Customs Authority), import of goods (such as Customs Authority). These prevailing Authorities are accountable for explicit tasks (such as say collection of customs duty). However, the introduction of VAT has the perspective to impact their function (such as Customs Authorities could be required to observe the collection of VAT on the import of goods) or there could be an intersection between their part and part of VAT Authorities. Given the aforementioned, before taster of VAT it is important that there is appropriate coordination between such multiples VAT authorities and other Authorities such as customs authority, property registration authority (as VAT Law may insist that VAT be paid at or before the property is transferred), price regulation authority (as VAT Law may insist that displayed prices be inclusive of VAT), corporate tax authority, if any (as VAT Law may insist that the turnover, as shown in corporate tax returns, to be reconciled with VAT returns) etc. Given the aforesaid discussion, early initiation of dialogue between various Authorities is must to ensure the smooth transition to VAT. As far as Kingdom o Bahrain is concerned and an overview of the preparation by the government on the preparation of VAT implementation it is proved that these are done efficiently by the finance ministry the Kingdom of Bahrain.
The modest user interface of VAT portal is supportive.
VAT gateways are an interface between the VAT payers and VAT Authorities.
Across VAT jurisdictions, VAT portals are used for procurement VAT registration, making VAT payment, the filing of VAT returns, submission of VAT related documents and even for audit /assessments. The first communication of VAT payer takes place at a time when the VAT portal goes live for registration purposes. For registration, VAT payers submit the information about the organization (along with necessary documents) on the VAT gateway. The registration process is originated through the generation of login id and password and finished after submission of documents. Afterward, the VAT Authorities evaluate the documents submitted and allow the VAT registration to the eligible cases. It may be noted that the VAT Authorities should safeguard that there is a minimum time gap between application and granting of VAT registration.
In certain VAT jurisdictions, it was witnessed that due to technical bugs on VAT portal, though VAT payer had applied for registration before due date still the registration was granted late and the penalty was levied. These kinds of errors could be avoided to attract the trust of the taxpayers. Further, given that VAT portal is an interface, if the same is modest then it is easier to practice/comprehend. Further, VAT portal should be approachable even in case of heavy traffic to the portal and bug- free. To develop the user interface, simple data validation controls should be placed (along with pop-ups to enable the VAT payer to understand the error and how to correct it). Also, before VAT portal goes live, it should be ensured that appropriate testing should be carried out. The VAT portal should also be designed for peak traffic to make it a robust / crash-proof portal. As we know The VAT portal of Bahrain meets most of these facilities stated above, let us hope an easy hassle free ongoing financial year ahead with VAT in Bahrain.

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