Plea to exclude VAT from EWA services rejected

The High Administrative Court yesterday rejected a lawsuit filed by a Bahraini lawyer against the Electricity and Water Authority (EWA) demanding the cancellation of its decision to apply the five per cent Value Added Tax (VAT) on its services. This follows a complaint lodged by Lawyer Mohammed Al Thawadi urgently demanding to suspend and cancel the authority’s decision to apply VAT on subscribers’ bills by the beginning of the current year.

Mr Al Thawadi justified his decision to complain against EWA by stating that the authority is the only provider of such services in the country without competition, contrary to the conditions of imposing the tax on commodities. Explaining further, the lawyer affirmed that one of the conditions required to apply the tax mentions that “the state does not undertake such purchases as sovereign and there is competition between the public and private sectors”, a competition which he said does not exist in the case of providing electricity and water supply services in Bahrain.

He also asserted that the decision is unconstitutional, claiming that Articles 15 and 17 of the Constitution of the Kingdom of Bahrain stipulate that taxes should only be imposed through a legislation. Mr Al Thawadi also accused EWA of not adhering to the Unified GCC VAT Agreement, which he quoted some of its provisions saying: “Article 29 did not stipulate the imposition of taxes on electricity supply services, but on the contrary, it gave each state the right to exempt some sectors in accordance with local law.

“Additionally, Article 30 expressly stipulated the exemption of government bodies from paying taxes, and therefore it is not permissible for the authority to collect taxes.” As reported by Tribune earlier, the EWA was represented in the court was the State Cases Authority, which claimed that it has the right to impose VAT on the services it provides as it is not a sovereign authority that solely provides them. Mr Al Thawadi said that he would appeal the court’s verdict.