The sale of goods using an online platform (e.g., a web portal), by a non-resident supplier to taxable persons in Bahrain is subject to import VAT, which is required to be paid by the taxable person. In case the supplies are made to a non-registered person in Bahrain, import VAT is payable by the customer (which is typically the responsibility of the import agent).
Certain goods imported into Bahrain are specifically exempt from VAT, including, inter alia, goods that are either zero-rated or VAT exempt if they were supplied locally in Bahrain, such as basic food items, investment in precious metals, pearls and precious stones, prescribed medicines and medical equipment, etc. Further details are available in the Imports and Exports VAT guide released by Bahrain's National Bureau for Revenue.
The Guide has been updated in May 2019 with the following guidance on imports by non-resident suppliers:
- In cases where the goods owned by and under the control of a non-resident supplier, are imported into Bahrain for the purpose of being sold either with installation or as part of a construction service, the VAT registered customer resident in Bahrain is liable to pay import VAT upon import of the goods, unless a VAT exemption applies. From a contractual point of view, the ownership and the risks associated with the goods are transferred from the non-resident supplier to the customer at the time the installation/ construction is completed.
- Subsequently, at the time of taxable supply of goods (with installation or as part of a construction service) by the non-resident supplier, the VAT registered customer can recover in full the VAT paid on the import of the goods, subject to the customer providing proof that the goods are imported for the purpose of a taxable supply.
- Further, the VAT registered customer will also continue to be liable to self-account for VAT under the reverse charge mechanism on the supply of the goods with installation or on the construction services (including on the value of the goods) made by the non-resident supplier in accordance with the relevant rules, except where VAT at the zero-rate applies. The VAT recovery depends upon whether or not the VAT registered customer will use (partially or fully) the acquired goods/construction for the purpose of a taxable activity.
Import of oil, gas, and other hydrocarbons is generally exempt from VAT, and their supply in Bahrain is zero-rated. However, certain supplies are excluded from zero-rating and the exemption at import, including the supply and import of products that are produced using oil, gas, and other hydrocarbons as feedstock. As a result of this exclusion, plastics, fertilizers, and asphalt concrete are subject to VAT at the standard rate on their supply in, and import into Bahrain. The export of such products may be eligible to VAT at zero-rate. Bahrain's National Bureau for Revenue has published a VAT Oil and Gas Guide, which sets out the general principles of VAT in relation to the oil and gas sector in Bahrain.