MOICT intensifies VAT inspection

Te ‘Companies Control’ and ‘Consumer Protection’ directorates of the Ministry of Industry, Commerce and Tourism (MOICT) have intensified their VAT inspection efforts following its induction on 1 January 2019. The VAT rate for Bahrain is set at the standard GCC rate of 5 per cent, however, a zero rate and exemption can apply in certain cases.

Affirming the measures taken, the Minister of Industry, Commerce and Tourism (MOICT), Zayed bin Rashid Al Zayani said the mechanisms implemented by MOICT will ensure the correct application of the VAT. MOICT measures, the Minister said, will prevent “businesses from charging VAT on goods and services that are not subject to VAT.”

Bahrain’s VAT Law and its Executive Regulations outline the penalties for non-compliance, which include hefty fines, administrative closure and referring cases to the Public Prosecution. These, according to an EY report, include penalties for failing to register for VAT (up to BHD10,000) and failing to provide the tax authority with information it requests (up to BHD5,000).

Under Article  63, the following violations could be regarded as tax evasion, and could result in imprisonment: Failing to register for VAT within 60 days of the registration deadline, Failing to pay VAT within 60 days of the payment deadline, Failure to provide a tax invoice, Charging VAT on non-taxable items and Unrightfully recovering input VAT.

The ministry, Al Zayani said, will closely monitor the movement of goods and services across the Kingdom, urging investors to comply with the Kingdom’s laws and regulations.