Documents needed for Import VAT claims through a clearing agent

A taxable person in Bahrain can recover the Import VAT paid at the customs as normal Input VAT subject to the condition laid out in Input VAT recovery rules as per the Bahrain VAT Law and Executive Regulations all met. (You may refer: to VAT Recovery in Bahrain for more information on Input VAT recovery rules).

Availability of the required documents is mandatory for claiming any Input VAT. Many businesses face an issue in availing import documents from clearing agents which are required for claiming the Import VAT paid.

Here we will discuss the documents required for claiming Import VAT and ways to resolve the issue faced by businesses while importing through a clearing agent.

What are the documents required for claiming Input VAT paid to Bahrain Customs Affairs?

As per the Bahrain VAT Law, the taxable person should keep a record of the documents which:

    1. Evidence that the company imported the goods to Bahrain and the Company should be the importer of record as per the customs.
    2. Evidence of the VAT paid to Bahrain Customs Affairs.

The above documents should show the commercial registration number and VAT account number of the company.

Based on the above requirements provided by the Bahrain VAT Law, the below documents would normally suffice the claim for the Import VAT paid:

    1. Customs declaration/Bayan.
    2. Customs Receipt.
    3. Commercial Invoice from the supplier.

Where the import payment has been deferred the documents evidencing such deferral should also be retained by the taxable person.

How to claim the Import VAT paid to Bahrain Customs Affairs?

The import VAT shall be claimed as Input VAT through the VAT return of the respective period during which the Import VAT was paid to the Bahrain Customs Affairs.

Where the company has deferred the payment to his VAT return, he will still be able to report this VAT as a recoverable input VAT within the same VAT return filed during the respective period.

The row named “Imports subject to VAT paid at Customs” or “Imports subject to deferral at customs” can be used to enter the Input VAT claim.

However, the claim of Import VAT is always subject to the normal Input tax recovery rules as per the Bahrain VAT Law and Executive Regulations.

Why is it difficult to avail customs documentation from the clearing agent?

One of the biggest problems that the businesses have recently faced is the non-receipt of customs documentation required for the purpose of claiming the Import VAT paid through the clearing agent.

Even if the company uses the service of the clearing agent the documents received from the customs (Customs Declaration) should show the name, Commercial registration number, and VAT account number of the company and not the clearing agent. The importer of records should always be the taxable person then only the taxable person can claim the VAT paid through the VAT return.

In case the clearing agent is being referred to as the importer of record then the company cannot claim the Import VAT paid to the Bahrain customs affairs as Input VAT. This means the Import VAT paid cannot be recovered and it will ultimately incur a cost to the company.

As per the usual practice, where one shipment contains goods for more than one customer of the same clearing agent, the agent should inform the Customs department and clear each good in the name of the respective customers on behalf of whom the goods are imported.

The customs documentation of such shipments should always separately indicate the person on behalf of whom goods were imported.

Where one shipment contains goods for more than one customer of a clearing agent, In such situations, for confidentiality reasons the clearing agent does not provide the customs documentation to the customers, since the document would indicate the details of other customers as well.

What to do in case the customs documentation is not received from the clearing agent?

The National Bureau for Revenue has come up with a practical solution to solve the above issue. NBR will now accept an alternate document from the clearing agent in place of the customs documentation.

The company can now retain such alternate documents received from the clearing agent to claim the import VAT paid to Bahrain Customs affairs.

Also, the National Bureau for Revenue has the right to contact the clearing agent to view the original customs document that was issued to the clearing agent by Bahrain Customs Affairs.

What are the requirements to be fulfilled by such alternate documents issued by the clearing agent?

The alternate set of documents issued by the clearing agent will be accepted by the National Bureau for revenue only if the below information is provided in such document:

    1. The name, Commercial registration number, VAT account number, etc. of the company on behalf of whom the clearing agent has imported the goods.
    2. The date on which the goods were imported
    3. The details (Item description, quantity, etc.) of the goods that are being imported.
    4. The total amount of VAT paid against the goods imported.
    5. The reference number of the customs document that was issued by Bahrain Customs Affairs against the goods imported.
    6. A statement from the clearing agent confirming that the VAT has actually been paid to the Bahrain Customs affairs

The document should be signed and stamped by the clearing agent on its letterhead and the same should be retained by the customer as a supporting document against the Import VAT claimed.

Our Tax Experts in Emirates Chartered Accountants Group Bahrain believe in a proactive approach to tax advisory services with a cost-effective and tailor-made option that is preferred by businesses all over. Our team of professionals is well versed with the Bahrain VAT Law as well as the UAE VAT Law  They are also equipped with practical experience in implementing VAT in UAE and VAT in Bahrain.

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