As per our understanding, the Kingdom of Bahrain is planning to double the standard rate of Value Added Tax (VAT) from 5% to 10% with effect from 1 January 2022. While the National Bureau for Revenue (NBR) has yet to make an official announcement, the proposed rate increase is part of the economic improvement plans following the impact of Covid-19 on the economy and the Fiscal Balance Program.
Businesses whose sales are partially or fully VAT exempt, will experience an increase in costs as a direct effect of the rate increase. However, the rate increase will impact all industry sectors in Bahrain and not just the Financial Services, Insurance and Real Estate sectors.
Source Deloitte
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