Bahrain started applying on Tuesday the value-added tax (VAT) to goods and services.
The Cabinet preceded this step by approving a memorandum submitted by the Ministry of Finance and National Economy to exempt 1,400 government services from the tax.
The tax will be applied during the first six months on companies and institutions with annual sales exceeding $13 million (BD five million), including hundreds of goods and services.
A royal decree ordered exempting 94 goods and services, most notably financial services, fuel, real estate and land transport services from the value added tax.
The Kingdom has also announced a six-month trial period to apply the tax in order to ensure the operation doesn’t affect the market’s stability and the overall economic situation.
Jafar al-Sayegh, head of Al-Ola Center for Economic Studies and Consultancy in Bahrain, said the tax would include hundreds of goods, especially luxury goods, electronic goods, quality cars, telecommunications, mobile devices, and some banking services.
"We've started seeing advertisements from some shops and restaurants for tax-free services," he said.
“I think this advertisement is temporary as the shops and restaurants will pay the tax on behalf of the consumer, but it will later be borne by the consumer himself.”
About 522 companies with a turnover exceeding BD five million per year were registered in the GCC National Tax Authority.
In its last meeting, the Bahraini Cabinet stressed the importance of ensuring that no manipulation and exploitation take place and that the needs of citizens are taken into consideration when applying these taxes.
