Bahrain's Nation Bureau for Revenue has issued VAT guides on the digital economy, financial services, healthcare, and real estate.
With respect to the sale of goods using an online platform (e.g., a website), the VAT treatment is summarized as follows:
- Bahrain supplier:
- Supplies made to customers in Bahrain – standard-rated (5%)
- Supplies made to customers outside Bahrain – zero-rated, provided the supply qualifies as an export
- Non-resident supplier:
- Supplies made to taxable persons in Bahrain – import VAT payable by the taxable person
- Supplies made to non-registered persons in Bahrain – import VAT payable by the customer, which is typically the responsibility of the import agent
With respect to the supply of electronic services, the VAT treatment is summarized as follows:
- Bahrain supplier:
- Supplies made to taxable persons in Bahrain – standard-rated
- Supplies made to non-registered persons in Bahrain – standard-rated when used and enjoyed in Bahrain
- Supplies made to customers outside Bahrain – outside the scope of Bahrain VAT if used and enjoyed outside of Bahrain
- Non-resident supplier:
- Supplies made to taxable persons in Bahrain – the reverse charge applies, with the customer required to account for VAT at the standard rate
- Supplies made to Non-registered persons in Bahrain – standard-rated when used and enjoyed in Bahrain, with the non-resident supplier required to register for VAT in Bahrain if no other person is liable to account for the VAT due
The VAT treatment of financial services is summarized as follows:
- Zero-rated if provided to a recipient resident outside Bahrain, provided that the condition for export of services are met
- Standard-rated (5%) if the consideration payable in respect of the services is by way of an explicit fee, commission, or commercial discount
- VAT-exempt if the consideration payable in respect of the services is by way of an implicit margin or spread
Where the consideration for a service includes both a fee and an implicit margin, each component of the consideration will be subject to the applicable VAT treatment (standard-rated and exempt).
The VAT treatment of healthcare is summarized as follows:
- The supply of preventive and basic healthcare services and associated goods and services is zero-rated;
- Goods and services related to a supply of healthcare services provided to a patient during the course of their treatment are zero-rated; and
- The provision of healthcare services by government hospitals and medical institutions are outside the scope of VAT when they are provided free of charge.
In order to benefit from the zero-rate, the healthcare services must be qualifying medical services provided by qualified medical professionals or qualified medical institutions to a patient during the course of their treatment.
The VAT treatment of real estate and related supplies is summarized as follows:
- Sale or lease of commercial or residential real estate
- Sale or lease of land, including partially developed land
- Labor accommodation where it meets the conditions of residential real estate
- Car parking for one month or more;
- Provision of serviced office space on an exclusive basis
- Construction of a new building
- Construction of an extension to an existing building (where the extension adds an additional room or functional space to the building)
- Site clearance works prior to the construction of a new building
- Services provided by engineers and surveyors and similar services of a supervisory nature that relate to the construction of a new building
- Civil engineering works relating to a new building
- Supply of hotel accommodation
- Car parking for less than one month
- Provision of serviced office space on a non-exclusive basis,
- Rental of a functional room, hall or facility
- Services that are charged separately from a supply of real estate, such as property management services, security services, cleaning services, maintenance, etc.
- Serviced apartments
- Storage services
- Restoration, refurbishment and/or reconstruction works on an existing building
- Demolition services (even when on land on which a new building will be constructed)
- Architects' and interior design fees
- Construction of swimming pools, saunas, and steam rooms
Lastly, the transfer of property as part of a going concern is outside of the scope of Bahrain VAT.