Bahrain’s National Bureau for Revenue (NBR) has intensified its efforts to enhance VAT compliance among businesses, urging entities with annual VATable supplies exceeding BD37,500 ($99,500) in any given month to register for VAT promptly. The NBR has already successfully registered over 22,800 entities by the end of the third quarter of 2023. The mandatory registration threshold aims to ensure that businesses actively participating in economic activities comply with VAT regulations. The NBR underscores the significance of registration, providing businesses with a dedicated VAT account number that facilitates VAT refund applications on purchases when submitting the VAT return.
The NBR emphasizes that economic activities encompass a wide range of operations, including commercial, industrial, agricultural, professional services, and any use of tangible or intangible assets. Entities involved in activities such as legal practices, fashion design, beauty services, events planning, or advertising are also included.
Once registered, businesses gain the ability to reclaim the VAT paid on their purchases, contributing to a more streamlined and transparent financial ecosystem. The VAT refund process is exclusively available to entities that have completed the registration process with the NBR.
Importantly, the NBR warns that failure to register for VAT could lead to severe consequences, including potential legal action for tax evasion. Individuals found guilty of this offense may face imprisonment for up to five years, coupled with fines amounting to three times the VAT due for natural persons or six times the VAT due for legal entities, in accordance with the VAT Law.
The NBR encourages citizens and residents in the Kingdom of Bahrain to actively report any violations of VAT regulations through various channels, including the NBR call center, the National Suggestions and Complaints System (Tawasul), email, and online platforms. This concerted effort aims to maintain the integrity of the VAT system, ensuring fair and accurate financial practices among businesses while fostering a culture of compliance.
As Bahrain strengthens its VAT registration measures, the NBR’s proactive approach underscores the government’s commitment to effective tax administration and the promotion of responsible business conduct. The NBR’s call for businesses to register serves as a critical reminder of the importance of aligning with regulatory requirements, contributing to a robust and transparent economic environment in Bahrain.
For businesses engaged in economic activities with annual VATable supplies surpassing the mandatory threshold, immediate compliance with the VAT registration process is imperative to avoid potential legal repercussions and uphold the integrity of the taxation framework.
