VAT General Statement
“The Kingdom of Bahrain has announced the introduction of Value Added Tax (VAT) effective from 1st January 2019 at a standard rate of 5% with certain supplies subject to a 0% rate and some exemptions.
In compliance with this Government mandate and in accordance with Bahrain’s VAT Law, we would like to inform you that GFH Financial Group B.S.C. (“GFH”) has been registered with the National Bureau for Taxation (“NBT”) for VAT purposes.
Therefore and effective from the 1st of January 2019, GFH will be subject to VAT in accordance with the VAT Law and its Executive Regulations.
For more information regarding the introduction of VAT in Bahrain, please refer to the NBT’s website using the following link: https://www.tax.gov.bh/FAQ”
1- What is Value Added Tax (VAT)?
VAT is an indirect tax imposed on the supply of most goods and services by VAT-registered businesses.
2- Why is VAT being introduced in Bahrain?
VAT is being introduced in Bahrain as part of Bahrain’s commitment to the Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf to introduce a GCC-wide unified VAT at a standard rate of 5%.
3-When will VAT be implemented in Bahrain?
The VAT will be implemented in Bahrain starting from 1 January 2019.
4- What is the rate of VAT?
There are two VAT rates applicable within Bahrain:
a. Standard Rate (5%); and
b. Zero Rate (0%).
Certain supplies will be “Exempt” or “Out of Scope” of VAT in accordance with the VAT Law and its Executive Regulations in Bahrain.
5- Is GFH required to charge VAT?
GFH is registered with the National Bureau for Taxation (NBT) in Bahrain for VAT purposes. Therefore, effective from the 1st of January 2019, GFH services will be subject to VAT in accordance with the VAT Law and its Executive Regulations.
6- Will VAT be applicable to all GFH services in Bahrain?
5% VAT will be applicable on all fixed fees charged by GFH such as placement fees. Profit on margin based products such as Murabaha profit will be exempt from VAT. Dividends from investment in securities will be out of scope.
7- Will VAT be applicable to Islamic Banking products?
Islamic banking products will be subject to the same VAT treatment as conventional products.
8- If I am not resident in Bahrain, will I still be charged VAT?
No, supplying financial services to a non-resident will be treated as an export of service and thus subject to 0% VAT if certain conditions are fulfilled.
9- Where can I get more information about the introduction of VAT in Bahrain?
For more information, please visit the following links:
GFH VAT Certificate
To view GFH’s VAT Certificate, please click here.