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Bahrain Releases Imports and Exports VAT Guide

The Bahrain's Nation Bureau for Revenue has released the Imports and Exports VAT Guide. Key points of the guide are summarized as follows:

  • In the case of the import of goods into Bahrain, the imports will be subject to VAT at the standard rate of 5%, unless they are specifically exempt from VAT at import. The guide stresses that goods that benefit from a customs duty exemption remain subject to VAT at import at the standard rate (unless a specific exemption applies);
  • Cases where imports of goods are exempt from VAT include inter alia goods imported in Bahrain that are either zero-rated or VAT exempt if they were supplied locally in Bahrain, such as basic food items, investment precious metals, pearls and precious stones, prescribed medicines and medical equipment, etc.;
  • In the case of the exports of goods, exports are subject to Bahrain VAT at a rate of 0% (zero-rated). The following conditions must be met in order for a supply of goods to qualify as an export of goods and thus to be subject to VAT at the zero-rate:
    • The goods sold must be shipped from a place in Bahrain to a destination outside the GCC Implementing States within 90 days from the date of their supply;
    • The goods must not have been changed, used, or sold to a third party before leaving Bahrain; and
    • The supplier must retain the commercial and official documents evidencing the shipment;
  • The documents that should be retained by the supplier of the goods in order to evidence the export operations include:
    • The documentation issued by the Customs Affairs at the Ministry of Interior to confirm the export;
    • The commercial document that identifies the supplier, the customer, and the place of delivery of the goods.
    • The transportation documents confirming the delivery of the goods outside the territory of the Implementing States (bill of lading, airway bill, or certificate of shipment); and
    • For the sales of goods in a departure area of an airport or port, details of the boarding pass of the purchaser evidencing that the individual is traveling to a destination outside the territory of the Implementing States.

Note, a GCC Implementing State a GCC Member State that has implemented national VAT legislation compliant with the GCC framework and that recognizes Bahrain as an Implementing State. In this respect, the guidance includes that Bahrain does not currently recognize any other GCC Member States as Implementing States for the purpose of VAT. Until further notice, any transaction involving another GCC Member State is treated, for VAT purposes, as a transaction involving a non-Implementing State.

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