Bahrain VAT on digital and e-services

The Gulf state of Bahrain introduced Value Added Tax on 1 January 2019. This included VAT on electronic or digital services provider to consumer by non-resident providers. B2B transactions may be nil rated, with the Bahraini customer applying the reverse charge.

The compulsory VAT registration threshold in Bahrain is BHD 37,000 per annum. A voluntary registration for businesses below this threshold is permitted, although this has its own minimum threshold of BHD 18,850 per annum.

VAT registrations must be completed with the National Bureau of Taxation within one month of the commencement of sales. It is possible to apply for a simplified VAT registration for digital services, with no right to deduct any local VAT suffered.

Appointing a local tax agent is optional; there is no requirement to appoint a fiscal representative.

Electronic services are services provided over the internet or any electronic platform, and which operate in an automated manner with limited human intervention and which are impossible to complete without the use of information technology.

Electronic services include, but are not limited to, the following:

• Services that provide or support an electronic network, including a website or web page on the internet
• Digital products, including computer programs and any changes or updates to software programs
• Services automatically generated by a computer over the internet or an electronic network, as a response to specific data inputs by the receiver
• Internet services software for information that allows the communications component to provide an assisting element, for example components that allow access to news, weather or travel reports, web hosting, online discussion and others
• Supply of a website domain, web hosting and remote maintenance of software and equipment
• Supply of visual content, such as images or texts that are automatically supplied, screensavers, electronic books and other documents and digital files
• Electronic supply of music, films, television series, games, magazines, newspapers, or other programs upon request
• Provision of advertising on websites and advertising space on websites and any rights associated with such advertising
• Provision of online educational services and
• Supply of computer programs and updates