Tax in GCC
- Overview of tax in GCC
- Taxes in UAE
- Taxes in Saudi Arabia
- Taxes in Qatar
- Taxes in Oman
- Taxes in Kuwait
- Taxes in Bahrain
Taxes in Bahrain
The Kingdom of Bahrain introduced an Excise Tax system on 30 December 2017. This is a tax imposed on specific goods harmful to human health and the environment. The aim of the tax is to discourage citizens from consuming products that are harmful to health. Excise Tax revenues contribute to the treatment of diseases resulting from the consumption of these products.
Excise Tax are imposed on the retail price of the following products:
- 100 % on Tobacco and its derivatives
- 50 % on Carbonates and soft drinks
- 100 % on Energy drinks
- Basic food products
- General medical services
- Passenger transport services
- Oil and gas sector
- International air tickets
- The goods are purchased during the Tourist’s stay in the Kingdom
- The purchased goods fall under the list of goods eligible for VAT refunds and are acquired for personal use
- The goods are purchased from one of the authorized merchants registered for the scheme
- The tourist leaves the Kingdom of Bahrain within two months from the date of supply of the goods
A 5% Value Added Tax (VAT) has been applied in the Kingdom of Bahrain from 1 January 2019. The National Bureau for Revenue (NBR) is the government agency responsible for implementing and managing VAT in Bahrain.
The final consumer pays VAT when purchasing any goods or services subject to the tax. In turn, companies pay VAT collected from the final consumer to the National Bureau for Revenue and recover the added value paid to its suppliers.
Goods and Services Exempted from VAT
The Kingdom of Bahrain began to gradually apply VAT as of January 2019. Companies and businesses are required to register with the The National Bureau for Revenue (NBR) in order to obtain a tax number and tax registration certificate. VAT registration is phased in so that companies within specific annual supply categories are required to register within specified time periods. All companies and institutions that have reached or are expected to reach annual supplies of between BD 37,500 (minimum mandatory limit) and BD 500,000 must register for value added tax by 20 December 2019.
VAT Tourist Refund Scheme
Tourists and other visitors to Bahrain may request VAT refunds on purchases made within the Kingdom. A refund may be filed at one of the designated desks at Bahrain International Airport. Tourists may receive the VAT refund in cash, or it can be transferred to their credit card accounts electronically if the eligibility conditions for are met:
For more information dial hotline number-80008001, available 24/7.
There is no personal income tax in Bahrain.
However, individuals employed by a natural person or a legal entity or an enterprise in the Kingdom of Bahrain are subject to contributions to the Social Insurance Organization (SIO) rules in Bahrain. Citizens must pay 7 % of their income in social security while expats pay 1 %.
Corporate income is not taxed, except for the oil and gas industry, which is taxed at 46%. There is currently a discussion of introducing a corporate income tax in Bahrain, which would apply to all businesses, but this is not confirmed yet.
Double Taxation Treaties
Bahrain has Double Tax Treaties (DTTs) in force with various countries, including Algeria, Austria, Bangladesh, Barbados, Belarus, Belgium, Bermuda, Brunei, Bulgaria, China, Cyprus, Czech Republic, Egypt, Estonia, France, Georgia, Hungary, Iran, Ireland, Isle of Man, Jordan, Republic of Korea, Lebanon, Luxembourg, Malaysia, Malta, Mexico, Morocco, the Netherlands, Pakistan, Philippines, Portugal, Seychelles, Singapore, Sri Lanka, Sudan, Syria, Tajikistan, Thailand, Turkey, Turkmenistan, the United Kingdom, Uzbekistan and Yemen.
Capital Gains Tax
Capital gains are not taxed in Bahrain.
Property Transfer Tax
There is no transfer tax of property.
Bahrain has no inheritance tax or wealth tax.
Expats are required to pay a municipal tax, which is equal to 10% of your monthly rent for your property or apartment.
Stamp duty is levied on transfers and/or registration of real estate at a rate of 2% of the property value.
The general rate of duty is 5% of the value in CIF (Cost Freight Insurance), except for alcoholic beverages which is 125% and Cigarettes which are 100%. Certain categories of goods such as paper and aluminum products are subject to 20% duty rate.
Owners of hotels and restaurants require to pay 5% levy charges of the entity’s revenue on a quarterly basis.
Bahrain does not impose withholding tax.