Foreign company selling into Bahrain and VAT

The situation

A non-resident making taxable supplies in Bahrain has a nil registration threshold where no one else must account for the VAT. Reverse charge applies to services bought by VAT registered Bahrain businesses.

The law

• Decree-Law No. 48 of 2018: registration thresholds: Mandatory registration at BHD 37,500 of taxable supplies in the past or next 12 months; voluntary from BHD 18,750
• Decree-Law No. 48 of 2018: reverse charge on imported services: A VAT registered Bahrain customer self accounts for VAT on services bought from a non-resident supplier

What it means for you

If your customers are VAT registered businesses, they usually self account under reverse charge and you may not need to register. If you sell to consumers, you likely must register. A fiscal or VAT representative may be needed and is jointly liable.

What to do

1. Classify customers as business or consumer.
2. Check reverse charge for business sales.
3. Register if consumer sales exist.
4. Appoint a VAT representative if needed.

Related

• Voluntary VAT registration in Bahrain
• Start charging VAT after registration
• Deregistering from VAT when sales fall
• Documents needed for Bahrain VAT registration
• Exempt sales and the VAT threshold
• Bahrain VAT mandatory registration threshold