TaxSavvyBH

Reverse charge on imported services

We paid a UK firm for software licences. Do we put this in our VAT return?

The situation

VAT registered Bahrain customers self account for VAT on services from non-resident suppliers under reverse charge.

The law

  • 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

Example: a BHD 5,000 software fee from a UK supplier. Report BHD 500 output VAT and, if your supplies are fully taxable, BHD 500 input VAT in the same return. The net cash effect is zero, but leaving it out is still an error the NBR can fine. Partly exempt businesses can recover only part of the input side.

What to do

  1. Identify foreign service invoices.
  2. Report reverse charge output VAT.
  3. Claim input VAT if eligible.
  4. Keep the invoices.

We can do this for youVAT return filing and payment (quarterly or monthly): BHD 120

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