VAT Implications of International Brand’s Marketing Support

VAT Implications of International Brand’s Marketing Support: Ever noticed a local firm promoting a brand from another country in Bahrain? This isn’t just a coincidence; it’s a strategic partnership that benefits both the local firm and the big brand. But how does it work, and what are the key things to remember?

Exploring Global Collaborations in Bahrain with a Focus on VAT Implications

Ever notice your local bookstore promoting a globally renowned author? Or a cafe highlighting a popular coffee bean from another continent? This isn’t just a marketing tactic, but a strategic alliance that benefits both the local firm and the big brand. Let’s explore how this partnership works in Bahrain, focusing specifically on the VAT implications.

Think of it this way: You own a charming cafe in Bahrain, and you love featuring unique, high-quality coffee beans. You come across a fantastic coffee from a roaster in South America. To introduce this brand to your customers, you launch a social media campaign highlighting its rich flavor and unique origin. This campaign, though an upfront cost, is an investment in attracting customers who appreciate specialty coffee, ultimately increasing your sales.

Now, here’s where the promotion benefits:
  • For you, the cafe owner: Your campaign attracts new customers who are drawn to the specialty coffee you’re promoting. This leads to increased sales and a wider audience for your cafe.
  • For the coffee roaster: They benefit from your local reach and expertise, gaining new customers in Bahrain without setting up their own company. They can focus on perfecting their craft while you handle the marketing in your local market.
However, it’s important to remember some key VAT implications:
  • Initially, you, the cafe owner, cover the advertising costs. This includes any Value Added Tax (VAT) that applies to these expenses.
  • If the coffee roaster decides to contribute financially to your campaign, it’s important to treat this as a service you’re providing them. This means you’ll need to charge them standard rated VAT for this service. This is regardless of the form of consideration received (e.g. cash, discount on goods supplied or to be supplied, set off of amounts owed). Also, this service will not qualify for the zero-rate for exported services under Article 73 of the Executive Regulations.

Profitable Collaborations: Local-Big Brand Partnerships in Bahrain

Local firms in Bahrain and big brands can create a powerful partnership that benefits both parties. Local firms gain access to well-known brands that attract customers, while big brands reach new markets and expand their reach without the need for extensive local investments. However, remember to navigate the financial aspects carefully, ensuring compliance with all relevant tax regulations in Bahrain for a smooth and successful partnership.

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 of implementing VAT in UAE and VAT in Bahrain.

Our wide range of services includes:

We’d be happy to support you – Call us!

For TAX Service in Bahrain

Mr. Bichin
+973 3619 8998

For TAX Service in UAE

Mr. Pradeep Sai
+971 556530001



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