VAT Revenues Reach BD603 Million in 2024; Inflation Remains Low

TDT | Manama
Email : editor@newsofbahrain.com

Value Added Tax (VAT) revenues climbed to BD603 million in 2024, marking a 10% increase over two years and easing pressure on Bahrain’s budget following two challenging pandemic years.

Preliminary figures, still subject to revision, show VAT revenues rose from BD584 million in 2023, reflecting a yearly increase of 3%.

VAT was first introduced in 2019, generating BD260 million that year.

Revenue Trends

VAT revenues dipped in 2020 and 2021 to BD234 million and BD247 million, respectively, as COVID-19 slowed spending.

In 2022, after the VAT rate was doubled to 10%, revenue jumped to BD547 million.

The government, in documents submitted to Parliament, stated that VAT revenues would surpass a set threshold.

Exemptions and Inflation

Inflation remains low, helping keep food prices stable and affordable. The government continues to exempt key sectors from VAT.

Exempt Sectors

The VAT exemptions cover 94 basic food items, education, healthcare, medicines, construction, property rentals and sales, precious stones, gold and silver investments, key banking services, oil and gas, and both local and international transport.

From January 2025, the government began imposing a minimum tax on multinational companies with annual global earnings of €750 million or more.

Additionally, it plans to introduce legislation taxing companies based on their income and profits. The exact threshold for this tax will be determined in upcoming deliberations.

The law will also outline the tax share that companies must pay, while the government explores strategies to encourage investment and the employment of Bahraini citizens.

Inflation Rate

Government reports indicate that inflation remained low in 2024, a trend sustained over several years.

Official figures recorded an inflation rate of approximately 0.9% last year, aligning with the rate in the United Arab Emirates. Inflation in other Gulf nations was higher, with even steeper rates in Europe and the United States.