Bahrain Issues Tax Fine Warning

editorial November 30, 2023

1 minute read

Bahrain has called on businesses to register for VAT or face a hefty fine and possible term in prison.

As part of the National Bureau for Revenue (NBR) efforts in spreading awareness and enhancing the level of VAT compliance, Bahrain has urged businesses whose annual VATable supplies exceeded BD37,500 ($99,500) in any month in the past year or is expected to do so in the next year to register for VAT.

The number of Bahrain VAT payers registered until the end of the third quarter of 2023 reached more than 22,800 entities.

The NBR highlights that economic activity includes any activity that is conducted in an ongoing and regular manner for the purpose of generating income, and includes:

Commercial
Industrial
Agricultural
Professional
Any use of tangible or intangible assets
Any similar activity, for example, legal practices, fashion design, beauty services, events planning, or advertising

The NBR emphasised the importance of registration for VAT purposes.

Once registered, a dedicated VAT account number will be assigned to the entity or individual, allowing the registered VAT payer to refund the VAT paid on purchases upon submitting the VAT return.

VAT refund applications are only accepted by VAT payers who have successfully completed their registration with the NBR.

The NBR confirms that all entities and individuals engaged in economic activities with annual VATable supplies that exceed the mandatory registration threshold must complete the VAT registration process in order to avoid having legal action taken against them.

Failure to register for VAT may be considered a case of tax evasion, which may be punished by imprisonment for a period of five years and by a fine equivalent to three times the amount of VAT due for the natural person or a fine equivalent to six times the amount of VAT due against the legal person in accordance with the VAT Law.

NBR urges citizens and residents of the Kingdom of Bahrain to report any violation of VAT through: