Saudi Arabia Seeks Feedback on VAT Regulation Amendments for Enhanced Clarity and Efficiency

• NBR published updated versions of VAT General Guide and VAT Financial Services Guide on August 6, 2024
• Updates address treatment of interchange fees and punitive charges under Bahraini VAT
• Interchange fees are charges paid by acquirer bank to issuing bank for processing transactions
• Interchange fees related to merchants or acquirer banks in Bahrain subject to VAT at standard rate
• Income received by issuing bank from non-resident PNO may be eligible for zero-rating under specific conditions
• Punitive charges will generally be taxable starting November 1, 2024 if they represent payment for services provided
• Only payments compensating for actual damages are outside scope of Bahraini VAT
• Payments for early termination of contract will attract VAT
• Businesses and financial institutions need to review and ensure compliance with new VAT regulations
• Updates reflect Bahrain’s commitment to refining VAT system and enhancing tax compliance environment.

Source: mailchi.mp

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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