The rate
The standard rate in Bahrain is 10%. Some goods and services carry reduced or zero rates and others are exempt. The difference matters: zero-rated sales still let you reclaim the tax on your purchases, exempt sales do not.
Who must register
VAT is 10%, raised from 5% on 1 January 2022. Registration is compulsory at 37,500 BHD of annual supplies, applied for within 30 days of the end of the month the threshold was passed. Voluntary registration starts at 18,750 BHD of supplies or of expenses and locks you in for 24 months. A non-resident has no threshold. Supplies of related persons are added together when testing the compulsory threshold.
How to register
Registration is a duty, not just a choice, once the thresholds are met. A resident who exceeds the mandatory threshold applies within 30 days, and the effective date of registration, from which VAT may be charged, is the one printed on the VAT registration certificate. If a person fails to register on time the NBR may register him automatically from the date he should have registered, and he must account for all VAT due on sales and purchases since that date.
A supplier whose zero-rated supplies alone exceed the threshold may apply to the NBR for an exception from registration. While the exception lasts the supplier cannot charge VAT or recover input VAT, and must apply to register within 30 days of ceasing to qualify.
Related legal persons resident in Bahrain that are each registered may apply to form a VAT group, with joint and several liability, and a member can leave voluntarily only after twelve months. To deregister, apply through the NBR portal within 30 days of ceasing activity or of making no VATable supplies for 12 consecutive months; VAT duties continue until the NBR confirms the deregistration date.
Filing and paying
Registered and filed with National Bureau for Revenue (NBR).
Monthly where annual supplies exceed 3,000,000 BHD, otherwise calendar quarters. The return and the payment are both due by the last day of the month after the period, so 30 April for the January to March quarter. A period with no transactions still needs a return.
Penalties for getting it wrong
Under 60 days late is an administrative fine: 5% to 25% of the VAT for a late return or payment, up to 10,000 BHD for failing to register, up to 5,000 BHD for breaching the invoicing rules. Past 60 days the same failure is treated as VAT evasion, a criminal offence carrying three to five years and a fine of one to three times the tax. Correcting your own error within 30 business days carries no penalty.