October 9, 2019

VAT registrations for small taxpayers

Bahrain announces businesses with an annual turnover between the VAT registration threshold of BHD 37,500 and BHD 500,000 should be registered to VAT from 1 January 2020. Bahrain’s parliament have started VAT implementation from January 1, 2019. So third and final tranche of mandated businesses are now expected to register for VAT in Bahrain.

The VAT law is consistent with the VAT agreement. It sets out that a business established in Bahrain which performs economic activities must register for VAT if it undertakes taxable supplies or imports exceeding the mandatory registration threshold of approximately Bahrain Dinar 36,500 or US$ 100,000. The National Bureau for Revenue (NBR) has announced that the VAT registration process is now open for entities which have threshold of BHD 37,500 and BHD 500,000 annually.

Bahrain introduced 5% VAT scheme in January 2019 and the VAT Executive Regulations are also expected to be released shortly. Foreign companies, without a fixed establishment in Bahrain, must register before 1 January 2019.

Filing for all businesses who register after 1 January 2019 will be based on three tax periods, i.e. for the periods ending 30 June, 30 September and 31 December.

Businesses below the mandatory VAT registration thresholds for 2019 are not required to register in 2019. For those who wish to voluntarily register in 2019, they must exceed the voluntary registration threshold of BHD 18,750.

1)VAT penalties

The NBR has approved a list of penalties that will be imposed on taxpayers for violation of the VAT laws.

1)Administrative penalties
  • Failing to register with the NBR with the time span of 60 days of the registration deadline: the taxpayer will be fined an amount up to BHD 10,000.
  • Filing a delayed VAT return or making late VAT payments (not exceeding 60 days): the taxpayer will have to pay fine about 5-25% of the value of the tax amount declared or paid.
  • Submitting false information regarding imports or supplies, where the actual value is higher than the value declared by the taxpayer in the tax return: the taxpayer will be fined 2.5-5% of the unpaid tax amount per month.
    1)Taxpayers who violates these following rules will be fined up to BHD 5000, they are:
  • Obstructing the NBR authorities from carrying out their duties
  • Not notifying the NBR about changes made to a submitted VAT registration application or a VAT return
  • Not displaying the prices of goods and services inclusive of VAT
  • Not providing information requested by the NBR
  • Failing to abide by the rules involved in issuing a VAT invoice
  • Violating any other provision of the VAT laws laid down by the NBR
    1)Penalties for tax evasion
  • Imprisonment up to 3 to 5 years and a fine amount of at least 3 times of VAT due
  • The fine amount will double if the taxpayer repeats the offence within 3 years from the date of conviction.
  • If multiple offenders are involved, they are jointly liable for the VAT payment due.
  • If a legal person commits tax evasion on their own name or on the behalf of someone else, the legal person will be fined double the normal penalty amount.

    For Our Bahrain Services

    BMS AUDITING & CONSULTING CO. S.P.C Unit 66, Building 104, Manama Center, Manama, Kingdom of Bahrain PH: +973 17664926| MOB : +973 35982893 info@bmsauditing.com | ash503@bmsauditing.com

  • Related Post