VAT increase to hit economy hard: MP

Manama : An increase in the proposed Value Added Tax (VAT) from 5 per cent to 10 per cent would severely harm the national economy, a parliamentarian has said.

Strongly denouncing calls by traders to increase VAT, MP Ibrahim Al Hammadi said that such increases are against the interests of consumers.  

“This is against the interests of consumers and traders alike. We at the House of Representatives are waiting for the Government’s proposed scheme to implement the details of unified GCC VAT agreement and the GCC’s unified agreement on selective taxation and the effects it may have on national economy and citizens,” Al Hammadi said, affirming that MPs will consider citizens’ interests before passing the new tax.

Al Hammadi’s statements came in response to Bahrain Chamber for Commerce and Industry (BCCI) First Deputy Chairman Khalid Al Zayani, who questioned in a open discussion recently why VAT was not increased to 10 per cent 

 “Establishing a public authority to collect the taxes will cost the government more than you will get from the same value-added ratio,” Al Zayani recently stated, calling for increasing the taxing percentage.

On his part, Al Hammadi yesterday questioned if Al Zayani’s statements represent the majority of BCCI members, while insisting on protecting citizens’ interests.

DT News reported recently that Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa confirmed that the VAT would not be implemented without obtaining the approval of the House of Representatives.

The minister said the Kingdom of Bahrain will apply the conventions of the agreement after the completion of all the constitutional and legal procedures, and after the issuance of the necessary legislation by the Legislative Authority.

He recently clarified in his replies to parliamentary queries on the implementation of VAT that the taxes are not income taxes and that they will be applied to goods and services at a rate of 5 pc, and will not include basic food items, medicines and medical supplies

The implementation scheme is expected to be presented to the council in the next few months.