Businesses who have already obtained VAT registration in Bahrain are required to file VAT Returns for a specific time frame as has been mandated by the NBR (National Bureau for Revenue). The whole process takes place online. The VAT Returns for businesses in Bahrain can either be filed on half-yearly or quarterly bases as of the year 2019, based on the turnover. From 2020 onwards, the NBR has mandated that this will be based on a quarterly and monthly basis. The return filing period for VAT will be on a quarterly basis for annual supplies up to 3 million BHD and for supplies exceeding 3 million BHD, this will be on a monthly basis.

The VAT return period for businesses that have registered will be either on quarterly or monthly bases. The NBR (National Bureau for Taxation) should be intimated in case companies with annual supplies up to 3 million BHD wish to change their filing period for quarterly returns to the monthly filing system. In case requests are accepted by the NBR from any business, they will receive the due notifications on the acceptance of requests regarding changes in the period for filing VAT returns.

Some Information on Monthly and Quarterly Filing of Returns

As mandated by the NBR, businesses with annual supplies surpassing 3 million BHD will be required to file VAT returns on the monthly basis. This means that returns will have to be filed each month within the due date which is the last day of the following month. Suppose your first tax period falls in February 2020. Then, the due date will be 31st March, 2020.

Businesses with annual supplies lower than 3 million BHD will be required to file VAT returns on the quarterly basis. This means that VAT returns will have to be filed on the quarterly basis within the last day of the last month in the quarter. Suppose February to April, 2020 is your tax period in this system. In this scenario, the due date will be the 31st of May, 2020.

Administrative Penalties in Bahrain (VAT)

Non-compliance in case of any business with regard to the VAT regulations, will equate to specific administrative penalties. These are based on the various kinds of non-compliances applicable for taxable businesses in the Kingdom of Bahrain. Businesses have to adhere to all pertinent regulations, right from applications for registration under VAT to the filing of returns. Any misses will naturally attract penalties as prescribed by the administration.

Here’s looking at the penalties applicable:

  • Not submitting VAT returns or paying taxes within the specific time period up to 60 days- 5-25% of taxes that are payable or with regard to the return that was required to be filed.
  • Not applying for VAT registration within 60 days from the stipulated timeline or the date on which the compulsory threshold for registration was reached- 10,000 Dinars (maximum).
  • Submission of false details about supply, including imports where the value is higher than what is declared- 2.5-5% of the amount that is unpaid for every month or a part for which taxes have not been paid.
  • Not displaying prices of goods and services including taxes- 5,000 Dinars (maximum).
  • Not providing information/data as sought by authorities- 5,000 Dinars (maximum).
  • Not adhering to the procedure and conditions linked to issuing of tax invoices- 5,000 Dinars (maximum).
  • Not notifying authorities on changes in the information/details included in VAT returns and registration within the timelines stipulated for the same- 5,000 Dinars (maximum).
  • Prohibition or hindrance for employees of authority or those people responsible for the inspection, monitoring, investigation, review process along with requests for viewing documents- 5,000 Dinars (maximum).
  • Violations committed in respect of other provisions of the VAT law or any other regulations- 5,000 Dinars (maximum).

Crucial aspects worth knowing

Along with the penalties mentioned here, VAT laws in Bahrain also talk about penalties for evading taxes. Instances related to tax evasion like improper return filing, registration or knowingly recovering taxes wrongfully may attract considerable penalties or even imprisonment in some cases. Penalties usually go up to a maximum of 5 times of the value of the recovery tax with up to 5 years of imprisonment based on the tax evasion act. Punishments may also be multiplied in case of repetition of the same offence within 3 years from the date of issuance of the final conviction.

For guidance regarding VAT filing in UAE, returns, accounting, auditing and all other processes in Bahrain, GCC Filings is a great option. The company provides a wide range of services for businesses pertaining to VAT and even company incorporation among others.

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