Manama- December 9, 2021:

The Gulf’s smallest economy Bahrain has announced the doubling of value-added tax (VAT) to 10 percent from 5 percent in 2022. The reform is part of its plans to fix the Gulf state’s finances.

The VAT increase likely to start next year could contribute receipts of about 3 percent of the gross domestic product in the next few years, up from about 1.7 percent this year, a rating agency has estimated.

“The successful approval of the VAT increase by parliament is a critical milestone within our economic recovery plans and our aim of achieving a balanced budget by 2024,” the ministry of finance said.

Saudi Arabia tripled its VAT rate to 15 percent last year to bolster state revenue when oil prices slumped. The UAE and Oman imposed a 5 percent VAT under a common 2018 framework by the GCC. Kuwait and Qatar have yet to implement the tax.

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