Phased introduction of Bahrain VAT

The Ministry of Finance (MoF) has announced transitional mandatory registration provisions for residents to be phased in during 2019. The table below sets out the mandatory registration thresholds, the applicable periods and the dates for registration. Businesses with taxable supplies exceeding the voluntary registration threshold of BD 18,750 may register during the transitional period.

The mandatory VAT registration threshold is BHD 37,500 and the voluntary registration threshold is BHD 18,750. As an anti-avoidance measure, the NBR has the power to automatically register a business if that business does not register by the required date. This can also apply where the turnover of related parties has been artificially split to avoid VAT registration.

While a higher threshold for a transitional period gives small and medium-sized businesses more time to prepare for VAT. Whereas, deferral of registration is likely to result in additional costs as these businesses would not be able to reclaim the VAT charged on their costs as long as they remain unregistered. Such businesses will need to carefully consider the advantages and disadvantages of deferring registration.