Bahrain: Non-resident businesses operating without VAT registration; VAT treatment for syndicated loans

Value added tax (VAT) developments

Non-resident businesses operating without VAT registration

The KPMG member firm in Bahrain has prepared a May 2023 report [PDF 115 KB] that describes value added tax (VAT) developments.

Non-resident businesses making taxable supplies in Bahrain without obtaining VAT registration

Non-resident businesses making taxable supplies to unregistered customers in Bahrain without obtaining a VAT registration as a non-resident taxable person have been penalized by the National Bureau for Revenue (NBR) once they applied for VAT registration and submitted their VAT returns for prior tax periods.

VAT treatment for syndicated loans

A syndicated loan is a loan offered by a group of lenders (“syndicate”) that provide funds to a single borrower. In this arrangement, there is typically a lead bank that carries out administration and management of the loan on behalf of the syndicate members in addition to providing its own share of funds to the lender. The lead bank may charge a separate fee to the syndicate members for the administration and management services.

In such cases, each syndicate member including the lead bank will recognize a supply of exempt financing services to the borrower for the portion of the interest to which they are individually entitled to as a lender. Additionally, the administration and management services will generally be supplied by the lead bank to the syndicate members for a fee or commission which will be subject to VAT.



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