How is VAT Applicable While Exporting Goods from Bahrain?
When there is a supply of goods that are being transported from the Kingdom of Bahrain to the outer world other than the implementing states, then the export of goods takes place. To record for VAT in Bahrain, if the export of good is to be considered it requires an actual supply of goods to take place in cash or in kind, which means that the sales of goods should happen between two legitimate independent individuals.
Only those supplies of goods which are being exported from Bahrain to the outside world other than the Implementing States* will fall within the scope of VAT in Bahrain. These exports of goods for VAT purposes will be categorized as Zero Rated provided certain conditions are met.
If the export of goods is taking place from outside the territory of Bahrain to the place outside Bahrain, then it does not fall under the purview of Bahrain VAT law and it may be considered as out of Scope of VAT in Bahrain. When Exports of goods takes place in Bahrain, they are subject to VAT at the rate of zero percent.
Note: * Bahrain does not currently recognize any other GCC Member States as the Implementing States for the purpose of VAT. Until further notice, any transaction involving another GCC Member State is treated, for VAT purposes, treat it as a transaction involving a non-Implementing State
What are Zero-Rated Supplies in Bahrain VAT?
Zero-rated supplies are those kinds of supplies which are taxable at the rate of zero percent, which means that there is no VAT being actually charged on the supply that is made. But at the same time, the supplier can still claim the input tax charged on expenses that are incurred while making the supply while filing for their VAT Return in Bahrain.
Two specifics of Zero – Rated Supplies are:
- The Selling prices of the supplies have no VAT impact (i.e., VAT is charged but at a rate of zero percentage); and
- Businesses in Bahrain are able to recover the VAT charged on the expenses incurred related to the export of goods.
What are the conditions to qualify for VAT at zero-percentage?
There are certain conditions to be satisfied when a supply of goods is taking place to qualify as an export of goods and to qualify for VAT at a zero rate.
- The goods that are being sold or exported must be shipped from the Kingdom of Bahrain to a destination outside the Implementing States within 90 days from the date of their supply.
- The goods should be in the same condition and must not have been changed, used or sold to a third party before it exits Bahrain
- While exporting goods, the supplier must retain the commercial and official documents to provide the evidence of the shipment and it is the responsibility of the supplier to check whether the necessary supporting documents are retained.
Date of supply:
One of the conditions, while supplying goods from the Kingdom of Bahrain and to qualify as an export of goods with the application of VAT at a zero percentage, is that the goods should be shipped to outside the territory of the Implementing States within 90 days from their date of supply.
To compute the 90-day timeframe for VAT purposes, the date of supply is:
- The date on which the transportation of the goods begins, where the transport is supervised by the supplier, or
- The date on which the goods are placed at the disposal of the purchaser, where the transport is not supervised by the supplier.
Supply of Goods that are exported from the Kingdom of Bahrain shall be considered as an export to a place outside the territory of the Implementing States on the day they leave the Kingdom of Bahrain to a destination outside the Implementing States.
Sale of goods in airport
Goods that are sold in departure areas are subject to VAT but at Zero Rated provided the following conditions are met:
- The goods should be sold at the departure area which is going out of the Kingdom of Bahrain.
- The goods should be under the possession of the passenger and the application of the zero-rate will not be applicable for sales of goods which are meant to be consumed.
- The supplier has obtained and retained evidence that the passenger is leaving Bahrain for a destination outside the territory of the Implementing States
What are the 5 documents required to retain as evidence while exporting goods from Bahrain?
The documents that are required for vat in the export of goods in Bahrain are mentioned as below:
- The documents issued by the Customs Affairs at the Ministry of Interior to confirm the export. This documentation should have the name of either the supplier or the purchaser or a third party acting in one or the other’s behalf.
- The commercial document which identifies the supplier, the customer and the place of delivery of the goods.
- The transportation documents confirming the delivery of the goods outside the territory of the Implementing States (e.g., bill of lading, airway bill or certificate of shipment).
- For the sales of goods in a departure area of an airport or port, details of the boarding pass of the purchaser (e.g., name, flight number, destination) which provides evidence that the individual is traveling to a destination outside the area of the Implementing States.
- Where in cases, where the shipping is being organized by the purchaser, in such cases evidence of the goods that they have not been yet been transformed, used or supplied to any third party between the date of their supply and their shipping may be required by the National Bureau for Revenue (NBR).
Emirates Chartered Accountants offer VAT Services in the Kingdom of Bahrain. Our tax officers are professionally equipped and well versed with the Bahrain VAT laws and have in hand experience of handling VAT in other GCC countries.
We are headquartered in Dubai, UAE as Emirates Chartered Accountants Group providing service to the business community with our core services Audit & Assurance, Tax Services, Company Formation, Accounting, etc.
Our VAT Services in Bahrain are:
