What all accounts are to be maintained and for how long? : Understanding VAT Record Keeping

Introduction

This article describes the record keeping requirements including the type of records to be maintained for VAT purposes together with the length of time these records must be retained.

The following are records and books as prescribed in the Bahrain VAT regulations which a VAT registered business should maintain.

1. Accounting books related to the Taxable Person’s work (all the transactions according to their chronological and numerical order).

2. Balance sheet and profit and loss account.

3. Records of salaries and wages.

4. Records of fixed assets.

5. Inventory records and accounts (including quantities and values) at the end of any relevant tax period.

6. A copy of tax Invoices, credit and debit notes issued, and original Tax Invoices received by the taxable person.

7. All customs documents relating to import and export transactions carried out by the taxable person.

8. Additional records determined by the Bureau.

These records should be retained in a secure way to avoid their damage, and in a state where they can be read and reviewed.

Period

The taxable person should retain records and accounting books for a period of five years from the end of the tax period to which it relates.

Records related to capital assets should be retained for a period of five years from the end of the tax period in which the adjustment period for such assets ends. Similarly, records related to real estate should be retained for a period of fifteen years from the end of the tax period to which they relate.

Electronic retention of records

A taxable person may retain records and accounting books electronically if the following conditions are met:

• Easy access and extraction of records and accounting books from the computer system upon the Bureau’s request.

• Ability to keep documents and records that support the records and the accounting books electronically or in hard copy.

• Records and accounting books are kept securely where no tampering or manipulation can occur.

The Bureau has the right to review the computer system or accounting software used by a

Taxable Person to ensure its compliance with the provisions of the Law and these Regulations.

Language

Records, accounting books and other documentation that are required to be retained can be maintained either in Arabic or English.