Bahrain Vat Payment: A Guide To Compliance For Businesses

If you're a business owner in Bahrain, you'll need to know how to pay VAT (Value-Added Tax). VAT is an indirect tax on the consumption or use of goods and services levied at the point of sale and imports. In Bahrain, the standard VAT rate is 10%, although some supplies are subject to a 0% rate. All businesses registered under Bahrain's VAT are responsible for collecting VAT at 5% on the supply of taxable goods or services. This VAT collected from customers should be paid to the Nation Bureau for Taxation (NBT). Taxable business owners in Bahrain should file VAT returns either monthly or quarterly, depending on their annual turnover. The total VAT amount payable to the NBR depends on whether the taxpayer's input tax is enough to offset their output tax.

VAT payment deadlines

For businesses with an annual turnover of more than 5 million BHD, VAT returns must be filed and payments made by the last calendar day of the month following the quarterly tax period. For example, for the tax period of January to March 2019, the deadline for VAT return submission and payment was 30 April 2019.

On the other hand, businesses with an annual turnover of less than 5 million BHD have different deadlines depending on their registration date. For instance, if a business registered for VAT between 1 January 2019 and 1 July 2019, their first tax period would be from the effective date of registration until 30 June 2019, and the VAT return must be filed and payment made by 31 July 2019. Thereafter, VAT returns must be filed and payments made on a quarterly basis for the last two quarters of the year.

From 2020 onwards, businesses with an annual turnover of more than 3 million BHD will have to file VAT returns and make payments on a monthly basis, while those with a turnover of less than 3 million BHD will continue to do so on a quarterly basis. It is important to note that all VAT-registered businesses in Bahrain should submit their VAT returns and payments on time, regardless of whether there is any VAT to pay or reclaim. Failure to comply with the deadlines may result in penalties, including a minimum 5% rate and imprisonment for over 60 days of delay.

How to calculate VAT

To calculate VAT in Bahrain, you can use the following formula:

VAT Payment = Output VAT – (minus) Input VAT

First, calculate your total Output VAT collected during the tax period and total Input VAT which you are eligible to recover. Once you have those figures, apply the above formula.

If your output VAT is more than the input VAT, the difference will be the VAT payable. If the output VAT is less than the Input VAT, it will result in a refundable amount, and therefore, no VAT payable.

For example, the Output VAT of Rose General Stores is BHD 300,000 and the Input VAT is BHD 200,000. The VAT payment is determined by adjusting the Output VAT with Input VAT:

Output VAT BHD 300,000 – (Minus) Input VAT BHD 200,000 = BHD 100,000 VAT payable.

Alternatively, you can calculate VAT by multiplying the product or service price by the VAT rate. Bahrain's VAT rate is 5%.

Online payment methods

There are three ways to pay your VAT bill online in Bahrain. These are:

• Online banking
• The BenefitPay mobile application
• Visiting a bank branch

Online Banking

To pay your VAT bill online, you will need to access your online bank portal or mobile banking app and add all the required information. If you are unsure of the amount you need to pay, you can enquire about the bill amount online before making the payment.

BenefitPay Mobile Application

The BenefitPay app can be downloaded onto your smartphone. This method of payment is transmitted electronically and is intended for individuals, not corporations. As with online banking, you can enquire about the bill amount before making the payment.

Visiting a Bank Branch

You can also pay your VAT bill by visiting a bank branch. You will need to submit a standard "Fawateer" form or a written request signed by an authorised signatory, depending on your bank.

In-person payment methods

If you prefer to pay your VAT in person, there are a few options available to you. Firstly, you can visit any of the National Bank of Bahrain (NBB) branches across the country. At the bank, request to make a VAT payment, and you will be guided through the process by a teller. Remember to bring the necessary documentation, including your VAT registration number and proof of identity.

Another option is to utilise the benefit payment machines located at various government offices and service centres. These machines, similar to ATMs, allow you to make VAT payments quickly and conveniently. Simply follow the on-screen instructions, and use your VAT registration number to ensure the payment is correctly attributed to your business.

Additionally, some larger retailers, such as supermarkets and department stores, may offer VAT payment services at their customer service counters. This option is usually available to those who are already customers of the store. You can enquire at your local retailer to find out if they provide this service.

Lastly, you can attend your local tax office in person and make the payment directly to a member of staff. This method may be the most time-consuming, as you will likely encounter queues, but it can be a good option if you have other tax-related queries or require additional assistance. Remember to bring all the necessary documentation, including your VAT registration certificate.

VAT payment criteria

Who needs to pay VAT in Bahrain?

All businesses registered under Bahrain VAT are responsible for collecting VAT on the supply of taxable goods or services. This VAT, collected from customers, should be paid by the supplier to the Nation Bureau for Taxation (NBT).

Businesses must file VAT returns on a monthly or quarterly basis, depending on their annual turnover.

The VAT payment deadline is the last day of the month following the end of the tax period. For example, for the tax period Jan-Mar 2019, the VAT return and payment should be made by 30 April 2019.

The VAT payable to the government is calculated using the following formula:

VAT Payment = Output VAT – Input VAT

Output VAT refers to the total VAT collected during the tax period, while Input VAT is the total amount that the business is eligible to recover. If the output VAT is more than the input VAT, the difference is the VAT payable. If the output VAT is less than the input VAT, there is no VAT payable, and the excess input VAT may be refundable.

There are three ways for a taxpayer to make their VAT payment:

• Online or mobile banking: Log in to the online bank portal or mobile banking app to enter the necessary details.
• BenefitPay mobile application: Download the BenefitPay app to make VAT payments.
• Bank: Visit a bank branch and submit either a standard Fataweer form or a written request signed by an authorised official.

Frequently asked questions