VAT first phase limited to firms with BD5 million annual sales

The first phase of VAT will be limited to firms having minimum BD 5 million in annual turnover, Rana Faqihi, the Assistant Undersecretary for Development and Revenue Policies, said in a statement issued yesterday. The move is expected to take the tax burden off Small and Medium Enterprises, which have expressed their woes over being taxed amidst tough economic conditions. A series of briefings will be held to ensure companies and business owners are ready for the implementation of the first phase of VAT on January 1, 2019, Ms Faqihi said.

Firms with BD5 million or more in annual sales must register with the National Bureau for Taxation (NBT), the entity in charge of managing the tax. Registration applications will be received until January 1 2019, she added.

According to the ministry, the NBT is ready to support businesses on VAT inquiries through the NBT call centre, 8000 8001, and the centralised emailvat@ mof.gov.bh. Ms Faqihi said 94 basic foodstuffs and other basic goods and services are exempt from VAT, in addition to a number of other goods and services mentioned in the executive regulations, including education and health services. She said the executive regulations include a detailed explanation of the operational and procedural aspects of the law, which comes within the framework of the Kingdom’s commitment to the unified VAT agreement ratified by the Gulf Cooperation Council (GCC) at the Riyadh Summit in 2015.

The executive regulations explain the procedures of calculation, payment and collection of VAT as a general consumption tax imposed on the import and distribution of taxable goods and services at each stage of its production and distribution, at a basic rate of 5 per cent, unless a special provision in the law was stated to include a tax exemption or a zero-percentage taxation.