The GCC states have worked together to develop a broad framework for the introduction of Value Added Tax (VAT). This framework agreement sets out the underlying principles of VAT laws for the six GCC countries.

While VAT is not intended to be a tax on business, collecting the tax and remitting it to the government will have significant compliance costs. There could also be cash flow implications. Supply chains need to be reviewed to understand the impact of VAT. VAT costs and accounting obligations will need to be identified so they can be addressed. There are also implications for IT systems. Adapting to VAT will mean updating or upgrading ERP and IT systems and interfaces to correctly capture input and output VAT. Governance frameworks will also need to be reviewed and updated to ensure policies, processes and controls comply - a continue to comply - with VAT legislation.

Member states retain some flexibility, such as how to treat healthcare, education and free zones for VAT purposes. Various GCC member states have publicly announce the introduction of VAT, with a proposed effective date of 1 January 2018. VAT is likely to significantly affect all businesses in Bahrain,directly or indirectly – and a 1 January 2018 start date leaves only a short window for businesses to prepare for VAT. Will you be ready?

How to prepare?

VAT rules can be complex and the implications are not always considered. Implementation of VAT needs careful planning for its success. Our dedicated VAT team will help you consider every stage of the implementation process.

How KPMG can help?

Our experienced VAT team in Bahrain, along with international VAT experts across the KPMG global network have been advising and implementing strategies to help organizations comply with their VAT obligations and reduce VAT liabilities and particularly for clients without full VAT recovery.

Related items

How does VAT work? (diagram)

The Unified Agreeement for VAT

Analysis of the GCC VAT Framework Agreement

Analysis of the GCC VAT Framework Agreement - Arabic

Bahrain Introduction of VAT

VAT implementation roadmap - Are you ready?

The Value Added Tax (VAT) Decree-Law No. (48) of 2018 of the
Kingdom of Bahrain

Events and media coverage

Click here to read our recent articles on VAT published in leading newspapers which also covers articles from some of the sector events organized in Bahrain.