The Bahrain Cabinet has approved an increase in the standard rate of VAT from 5% to 10% with a proposed effective date of 1 January 2022. The announcement comes in response to the impact COVID-19 has had on the Bahrain economy and is aimed at stabilising the Fiscal Balance for Bahrain.
Businesses may have taken VAT cost less seriously as errors at 5% or the inability to claim input VAT may have not had a material impact on their finances. However, with the rate set to double, VAT should become a material consideration for most businesses – with VAT at 10%, errors and the inability to claim input VAT is likely to have a significant impact on businesses.
Source KPMG
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