KPMG Bahrain to organise seminar on VAT

Manama : KPMG in Bahrain is organising a VAT seminar on  June, 5 at the Diplomat Radisson Blu Hotel from 3:00pm - 5:00pm to discuss the imminent introduction of VAT and its’ implications on the business environment in Bahrain. 

Partner and Head of Tax and Corporate Services at KPMG in Bahrain, Craig Richardson, stressed the importance of corporates’ readiness to adopt this development that will lead to a significant change in the business environment.

The GCC countries are expected to introduce VAT at a rate between 3-5 per cent by the end of Q2, 2016. Draft legislation is then expected in the following months, providing practical guidance and executive regulations regarding the new VAT law. 

“Once rolled out, VAT will affect sales of goods and services in Bahrain with limited exemptions and consumption tax relief. However, there will be a right for businesses to claim a credit for VAT paid on their expenditures relating to their business activities. Therefore, it is important for businesses to start reviewing and considering their business models to offset this anticipated change,” Richardson added. 

Although implementation of VAT will increase the cost of doing business, revenues gained from VAT will be ploughed back into the economy. This will also contribute to enhancing the overall business conditions, while maintaining the country’s position as a business friendly hub.  

Bahrain has long been considered an attractive low-tax environment, especially for businesses looking to invest in the Northern Gulf region. Generally, the introduction of a broad based VAT at a low rate is unlikely to deter investment into Bahrain, or the GCC Region. 

Infrastructure development, access to high-potential growth markets in Africa and Asia, free-trade zones, competitive labour costs, few trade barriers, no exchange controls with USD pegged currencies, as well as economic and political stability, are all factors to be considered. 

Richardson confirmed that the implementation of VAT at a low rate will not have a recurring inflation impact unless the VAT rates are increased. 

To register for the seminar, which will be free of cost, contact Khalid Seyadi: kseyadi@kpmg.com.