Bahrain VAT transition rules

Bahrain is to introduce a 5% VAT from 1 January 2019. The following rules will apply to supplies contracted and supplied over the introductory period.

• Where invoices were issued, or payments made, prior to 1 January 2019 for post-implementation supplies, then VAT is still due. In this case, a debit note for the original invoice should be issued with the correct VAT indicated.
• Initially, goods supplied to other GCC states that have also implemented VAT (Saudi Arabia and UAE) will be treated as exports. There are plans to introduce zero-rating with reverse charge supplies to eliminate import VAT, but this is dependant on the introduction of a Electronic Services System transaction reporting platform which has yet to be developed.
• For pre-January 2019 contracts which are silent on the VAT treatment, then the price will be VAT inclusive. This presents a cash flow risk for the supplier.

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