Bahrain: Court to issue verdict on case to impose VAT on EWA

The final verdict on the decision by the Electricity and Water Authority (EWA) to apply Value Added Tax (VAT) on subscribers’ bills is set to be issued on February 24.

A Bahraini lawyer has insisted that such a decision by EWA is unconstitutional, demanding immediate cancellation of the decision. This came as lawyer Mohammed Al Thawadi appeared before the High Administrative Court, which is examining a complaint lodged by him against the authority.

In his statements, the lawyer asserted that the decision is unconstitutional, claiming that Articles 15 and 17 of the Constitution of the Kingdom stipulate that taxes should only be imposed through legislation.

Mr. Al Thawadi also accused EWA of not adhering to the Unified GCC VAT Agreement. “Article 29 did not stipulate the imposition of taxes on electricity supply services, but on the contrary, it gave each state the right to exempt some sectors in accordance with local law.

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“Additionally, Article 30 stipulates the exemption of government bodies from paying taxes, and therefore it is not permissible for the authority to collect taxes.”

The lawyer’s last statement came after the authority denied the accusations during the previous hearing.

“The authority does not exercise its functions as sovereign and there is no monopoly of providing electricity and water supply services in the Kingdom,” the authority’s counsel had told the court.

Further supporting his accusations against the authority, Mr. Al Thawadi said: “The authority’s claim that it does not operate in a sovereign manner and that there is nothing preventing competition with it from any other party in providing its services is incorrect.

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“The Electricity and Water Law gave the authority many rights and powers that emphasize its sovereignty. Article 2 of the same law explicitly states that this work is not permissible for individuals or any other party than the Electricity and Water Affairs Ministry.”

The EWA, represented in the court by the State Cases Authority, claimed that it has the right to impose VAT on the services it provides as it is not a sovereign authority that solely provides them.

This comes a few weeks after it announced that its electricity and water supply services will be subjected to 5% Value Added Tax.

 

Source: DT News

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