- March 5, 2020
- Posted by: Emirates CA
- Category: Tax
Bahrain VAT Law
The Bahrain VAT Law clearly describes the records to be kept or the documents to be retained for VAT in Bahrain. The Bahrain VAT Law also enlightens about the time duration of these records that are to be retained.
In this blog, we will discuss what Records to be maintained for VAT in Bahrain and how long these records are to be retained.
What are the Records to be maintained for VAT in Bahrain?
All companies who are registered for VAT in Bahrain (Hereafter referred to as taxable person), is required to retain the following documents for the for VAT purposes under the Bahrain VAT Law
- Accounting books related to the taxable person’s transactions (the transactions must be maintained in chronological order).
- Records of all supplies and imports of goods and services, including:
- All tax invoices and alternative documents received from the suppliers.
- All tax credit notes or tax debit notes and alternative documents received from the suppliers.
- All tax invoices and alternative documents issued by the taxable person to its customers.
- All tax credit notes or tax debit notes and alternative documents issued by the taxable person to its customers.
- Balance sheet and profit and loss accounts.
- Records of Wage and salary.
- Fixed assets (capital assets) records.
- Stock records and statements including the quantities and values for each tax period.
- All customs documents related to import and export.
- Any additional records as determined by the NBR.
The National Bureau for Revenue (NBR) has also advised keeping the following records:
- Records of goods and services that have been disposed of by the taxable person or that have been used for non-business purposes.
- Records of goods and services that have been purchased in respect of which input tax is not recoverable.
- Records of any deemed supplies.
- Records of corrections of errors.
Is there any specific language in which the records are to be maintained under the Bahrain VAT law?
With the implementation of VAT in Bahrain, the NBR has instructed to maintain the records in English or Arabic. Hence, it is compulsory for a taxable person to maintain all the records for the purpose of VAT in Arabic or English.
It is important to note that during the verification, review, audit or appeal from the NBR, they may ask the taxable person to convert some or all of the documents which are maintained in any other language to Arabic or English.
Can the documents for VAT in Bahrain be retained by a third party?
There is no compulsion that the documents should be retained by the taxable person himself. The taxable person may appoint a third party to retain the documents that are required to be maintained under the Bahrain VAT Law for VAT in Bahrain
However, the responsibility to retain the documents remains with the taxable person and the taxable person shall face penalties if these documents are not in compliance with the Bahrain VAT Law.
In which format the records are to be retained for VAT in Bahrain?
As per the Bahrain VAT Law, the taxable person must retain the documents in good condition and free from any damage.
However, the documents need not be maintained physically as the taxable person has an option to retain the documents in electronic format. This option is subject to the following conditions specified by the NBR:
- The records and documents should be easily accessed from the computer system as and when requested by the NBR to do so.
- The hard copies of the documentation that support these books and records can be obtained as and when required.
- The computer system has sufficient security to ensure that the documents maintained electronically cannot be tampered with or manipulated by any means.
How long should the documents be retained by the taxable person in Bahrain?
As per the Bahrain VAT Law, the taxable person must retain the relevant records for a period of five years from the end of the relevant tax period or from the end of the tax period where the adjustment period ends (for capital assets). That is the records of the tax period in the year 2019 should be maintained until the year 2024.
In the case of real estate, the relevant records should be maintained for a period of 15 years after the end of the relevant tax period in which they relate to.
However, the NBR may notify the taxable persons to retain the records for a longer period than this period.
How long should the documents be maintained in case the business ceases to carry out its taxable activities in Bahrain?
Even if a taxable person ceases to carry out his taxable activities because of a transfer of the going concern or merger, the taxable person is still required to retain the documents for the time frame mentioned as per the Bahrain VAT Law (that is 5 years or 15 years whatever the case may be).
In the event of insolvency or bankruptcy of the taxable person, the legal representative of the taxable person would still be liable to retain the documents. But in this case, as per the Bahrain VAT Law, the documents shall be retained for a period not less than 12 months from the date on which the procedures for insolvency or bankruptcy have been finalized.
Are VAT accounts to be retained in your books of accounts?
The taxable person should set up VAT accounts in the books of accounts in order to record the actual VAT payable to the NBR or the VAT receivable from the NBR across different tax periods. It is necessary to ensure that such accounts maintained in a relevant tax period match with the VAT return filed for the respective tax period at any point in time.
You may watch it through our video: Records To Be Maintained For VAT in Bahrain
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