Bahrain Issues Warning: Register for VAT or Face Legal Consequences

Bahrain is cracking down on businesses, urging them to register for Value Added Tax (VAT) promptly or face severe penalties.

VAT Registration Deadline Looms

The National Bureau for Revenue (NBR) has made a strong statement, stressing the need for firms to register for VAT right away if their yearly VATable supply was more than BD37,500 ($99,500) in any month last year or is expected to surpass this amount in the next year.

Awareness and compliance efforts

The NBR is intensifying its efforts to raise awareness and enhance VAT compliance among businesses. As of the end of the third quarter of 2023, more than 22,800 entities in Bahrain have registered as VAT payers. The NBR underscores that economic activity, encompassing various sectors such as commercial, industrial, agricultural, professional services, and more, falls under the VAT registration requirement.

Importance of VAT Registration

The registration process is not merely a formality; it holds significant implications for businesses. Once registered, entities or individuals receive a dedicated VAT account number, facilitating the refund of VAT paid on purchases upon the submission of the VAT return. However, this benefit is exclusive to those who have successfully completed the registration process with the NBR.

Legal Consequences for Non-Compliance

The NBR stresses that entities and individuals engaged in economic activities surpassing the mandatory registration threshold must complete the VAT registration process promptly. Failure to do so may result in legal action. Non-compliance could be deemed tax evasion, subjecting the individual or entity to imprisonment for up to five years and fines equivalent to three times the amount of VAT due for individuals or six times for legal entities, as per the VAT Law.

Reporting Violations

To reinforce compliance and tackle any violations, the NBR encourages citizens and residents of Bahrain to report non-compliance through various channels, including the NBR call center, the National Suggestions and Complaints System (Tawasul), email, or online submissions.

Bahrain is sending a clear message that VAT registration is not optional, and businesses failing to adhere to the deadline will face legal repercussions. The move aligns with global efforts to enhance tax compliance and revenue collection through robust VAT systems.

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