What is VAT?

What is VAT?

VAT is indirectly charged on selected goods and services bought and sold by businesses.

The GCC countries agreed to implement VAT at a standard rate of 5%. Accordingly, 5% VAT has been launched in Bahrain as of January 1st, 2019 with a few exceptions.

To find the VAT Treatment and Policies of goods and services in Bahrain, please follow the link.

How does VAT work?

VAT is imposed at each phase of the supply chain, from the production to the final sale of the good or service, as illustrated below:

When purchasing selected goods or services, consumers pay the VAT cost. In turn, businesses pay the National Bureau for Revenue (NBR) the VAT collected from their customers’ purchases and recovers the VAT they paid to their suppliers.