Bahrain Tightens Invoice Descriptions and Capital-Assets Adjustments in Updated VAT Guide

Summary

Bahrain’s National Bureau for Revenue published version 1.15 of its VAT General Guide on 29 July 2026, refining the rules on the description of supplies in VAT invoices and on input-VAT adjustments under the capital assets scheme.

Invoice descriptions (full and simplified) must now be detailed enough to determine the correct VAT treatment, and invoices for new-building construction must include the project’s building permit number.

Input VAT on capital assets is recovered on intended use at purchase but adjusted over a 5-year period (movable tangible and intangible assets) or 10-year period (immovable assets) where actual use later diverges.

Extended article

Bahrain’s National Bureau for Revenue (NBR) has released version 1.15 of its VAT General Guide, published on 29 July 2026. The update refines two practical areas of compliance: the content of VAT invoices and input-VAT adjustments under the capital assets scheme.

On invoicing, the requirements for both comprehensive and simplified VAT invoices are supplemented with further guidance on the description-of-supplies field. The description must be sufficiently detailed to indicate the nature of the goods or services in a manner that allows the correct VAT treatment to be clearly determined. Notably, for supplies related to the construction of a new building, the VAT invoice must now also include the building permit number of the relevant project – a targeted addition for the real estate and construction sector.

On the capital assets scheme, the Guide expands the treatment of a change in use over an asset’s lifetime. Input VAT recovery on capital assets – tangible assets such as buildings, equipment, machinery, vehicles and servers, and intangible assets such as software licences and long-term subscriptions – is based on the intended use at the time of purchase, and is subject to adjustment over an adjustment period of 5 years for movable tangible and intangible capital assets, and 10 years for immovable tangible capital assets, where actual use subsequently diverges from that intended use. Businesses should review invoicing practices, input-VAT recovery criteria and capital-asset monitoring accordingly.

Sources: Bahrain NBR – VAT General Guide; Regfollower – NBR updated VAT guide.

Other articles

Bahrain Updates General VAT Guide with Additional Guidance on Invoice Details and Asset Change in Use

Bahrain’s National Bureau for Revenue (NBR) updated its VAT General Guide (Version 1.15) on 29 July 2026, introducing additional guidance on VAT invoice requirements. The revised rules clarify that invoice descriptions must be detailed enough to determine the correct VAT treatment of the goods or services supplied. For construction-related supplies involving new buildings, taxpayers must also include the relevant building permit number on the VAT invoice.
The Guide also expands the guidance on the Capital Assets Scheme (Section 11.8.4), which requires businesses to adjust recovered input VAT when the actual use of a capital asset differs from its intended use at acquisition. The rules apply over an adjustment period of five years for movable tangible and intangible assets and ten years for immovable property, ensuring VAT recovery reflects real taxable and exempt use.
Practical examples illustrate how VAT adjustments must be calculated when asset use changes. If an asset initially used for taxable activities becomes partially used for exempt supplies, part of the previously recovered input VAT must be repaid annually for the remainder of the adjustment period. Conversely, where an asset shifts from exempt to taxable use, taxpayers may recover additional input VAT over the remaining years of the adjustment period.

Source Orbitax