Bahrain amended VAT law has been released on 23 December 2021 for the change in standard rate of VAT from 5% to 10% w.e.f 1^st January 2022. 

National Bureau of Bahrain (“NBR”) also issued VAT rate change transitional provisions guide to provide an explanation on the transitional rules, which apply during the transitional period between the 5% vat rate and 10% vat rate.

Below are the key highlights of the transitional provisions:

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1. One-off supplies

Scenario	VAT rate
Contracts entered before 24th Dec 2021 and date of supply is till 31st Dec 2022	VAT rate 5% (provided no changes to contract made prior to the supply)
Contracts entered before 24th Dec 2021 and date of supply is on or after 1st Jan 2023	VAT rate 10%
Contracts entered on or after 24th Dec 2021 and date of supply before 1st Jan 2022	VAT rate 5%
Contracts entered on or after 24th Dec 2021 and date of supply on or after 1st Jan 2022	VAT rate 10%

In case, where the contract is entered on or after 24^th Dec 2021 and tax invoice is issued or consideration received before 1^st Jan 2022 for a one-off supply of goods or services to be made on or after 1^st Jan 2022, then under transitional rule 10% VAT will apply on such supplies.

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2. Continuous supplies

Scenario	VAT rate
Contracts entered before 24th Dec 2021 and date of supply is till 31st Dec 2022	VAT rate 5% (until any change or renewal or expiry of contract)
Contracts entered before 24th Dec 2021 and date of supply is on or after 1st Jan 2023	VAT rate 10%
Contracts entered on or after 24th Dec 2021 and date of supply before 1st Jan 2022	VAT rate 5%
Contracts entered on or after 24th Dec 2021 and date of supply on or after 1st Jan 2022	VAT rate 10%

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In case, where contract is entered on or after 24 December 2021 (or if entered before 24^th Dec 2021 but changed between 24^th Dec and 31^st Dec 2022), 5% VAT will apply on value of goods and services delivered before 1^st Jan 2022 and 10% VAT rate will apply on value of goods and services delivered on or after 1^st Jan 2022 (in case of contract change done before 1^st Jan 2022).  Where contract change takes place after 1^st Jan 2022, 10% VAT rate will apply from the date the contract is amended/changed.

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This document is only for information purposes and should not be construed as an advice. It does not necessarily cover each aspect of the topic with which it deals. You should not act upon the contents of this document without receiving formal advice on your particular circumstances.

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