January 3, 2019

PENALTIES ON VAT VIOLATORS-A REMINDER

In sequence with HM King Hamad’sorders, the Minister of Industry, Commerce and Tourism Zayed bin Rashid Al Zayani, gave emphasis to the ministry’s dedication to evaluating the means of application VAT during its trial period starting January 1, 2019.
The Minister stated the ministry will not bear any non-compliance with the kingdom’s VAT Law and its administrativepolicy. The VAT rate for Bahrain is set at the standard GCC rate of 5%, however, a zero rate and exemption can apply in certain cases.
Incidentally, the minister highlighted the methods that the ministry has employed to increase consumer’s safety to avoid charging VAT on goods and services that are not subject to VAT. He highlighted the ministry’s Companies Control Directorate and Consumer Protection Directorate’s hard work in keeping an eye on the actions of all commercial establishments.
Al Zayani completed by underlining the significance of ongoing to increase VAT routine and legal outlinealertness to ensure successful and faultless execution of the VAT.
Bahrain’s VAT Law and its Executive Regulations chart the penalties for non-compliance, which comprise heavily built fines, administrative closing and referring cases to the Public Prosecution. These, along with expert’s report, include penalties for weakening to register for VAT (up to BHD10,000) and failing to offer the tax authority within order it requests (up to BHD5,000). Under Article 63, the following disobediences could be regarded as tax evasion, and could result in imprisonment: Failing to register for VAT within 60 days of the registration deadline, Failing to pay VAT within 60 days of the payment deadline, Failure to provide a tax invoice, Charging VAT on non-taxable items and Unrightfully recovering input VAT. The ministry, Al Zayani said, will closely monitor the movement of goods and services across the Kingdom, urging investors to comply with the Kingdom’s laws and regulations.
Customers are taken back that the National Bureau for Taxation (NBT) has brought in a hotline (80008001) devoted to countering to exploration and grievances. Additionally, depositors may also register their businesses by visiting NBT’s website (www.nbt.gov.bh)
Fines:
An organizationalfine is compulsory on taxpayers who consign any of the following acts:
• Postponed surrender of VAT returns or overdue payment of tax, for a prearranged period not exceeding 60 days. The fine, in this case, would be between 5% and 25% of the tax value to be documented or paid.
• Deteriorating to register for VAT within 60 days from the registration time limit, or within 60 days after attainment the compulsory registration threshold limit. The fine, in this case, may go up to BHD 10,000.
• On condition that inaccurate information on the trade in of goods and services that leads to an enlarged value declared in tax returns.
For any individual who obligates the following offenses, a fine of BHD 5000 will be imposed:
• Not notifying the Authority of modifications in a registration application or changes in VAT return information within precise dates.
• Not exhibiting the price of goods or services inclusive of tax.
• Not making available information requested by the Authority.
• Not fulfilling with the rules relating to issuing a tax invoice.
• Breaking any rules or regulations of VAT law.
Tax avoidance of
The following illegal acts are considered avoidance duty and carry more significant penalties:
• Not register within 60 days from the last date to register for VAT.
• Not submitting tax returns or pay a tax due on supplies or imports within 60 days from the due date.
• Illegally subtracting input tax and making tax alterations, or going against the provisions of input tax deductions.
• Illegally asserting tax in part or totally.
• Presenting fake or inaccurate documents, records, or invoices in order to in part or entirely to avoid paying tax.
• Failing to issue tax invoices for taxable supplies of goods, services or imports.
• Issuing tax invoices for non-taxable supplies.
• Not keeping upwell thought-outcredentials and accounting books related to tax invoices, imports, and supplies of goods or services.
Penalties for tax evasion
• The average punishment for tax evasion is a prison sentence between 3 to 5 years. Besides this sentence, the lawbreaker will have to pay a fine for asum that is not less than the tax amount due but can be up to 3 times the tax amount due.
• The fine will be twofold if the taxpayer avoids tax again within 3 years from the date of the first judgment.
• An authorized individual will have to pay a fine if their name is used for avoiding tax function or for their advantage dishonestly or unlawfully. The fine will be twofold the sum of the normal fine (which range between 5% and 25% of the tax value to be documented or paid).
• Conveying machinery, equipment, and instruments used for avoiding tax principle may take possession by the Authority. Ships and aircraft will also be taken possession of if they have been prepared and used for tax evasion purposes.
• Tax avoiding offenses are measured with the same sense of importance and exigency as other crimes of disgrace and untruthfulness. No criminal action can be taken in tax evasion cases without the request of the Ministers or his authorized representatives.
• The Minister or his official ambassador may bring together some of the penalties entirely or in part. In order to do this, the blamed party or their representative must send a written request to the Minister or his authorized representatives before the litigation, during the trial, or before the final judgment on the case. If the blamed party pays asum corresponding to the smallest amount of the determined fine, besides the tax due, the Ministers may concur to settlement. Once the settlement is attained, it marks the end of the illegal actions.

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