Excise Tax is a form of indirect tax levied on specific goods. These goods are typically those that are harmful to human health or the environment. The intent of Excise Tax is to reduce consumption of these commodities while also raising revenues for the government that can be spent on public services.<\/p>\n
The legal framework for excise duty implementation in Bahrain is the Common Excise Tax Agreement of the States of the Gulf Cooperation Council (GCC) that was agreed by GCC Member States in November 2016. Following the framework, His Majesty King Hamad bin Isa Al Khalifa signed the GCC Common Excise Tax Agreement and the Bahraini Excise Tax Law on 7 December 2017. The GCC agreement and the local law were published in the Official Gazette on 14 December 2017. Based on the Excise Tax Law, excise duty was implemented in Bahrain on 30 December 2017.<\/p>\n
The Implementation Regulations of Excise Tax were issued with the Resolution of the Minister of Finance (Resolution No. 17 for the year 2017) and published in the Official Gazette on 28 December 2017.<\/p>\n
Is Excise Tax chargeable on all products?
\nThe following goods will be subject to excise tax in Bahrain at the noted tax rate:<\/p>\n
Excisable goods Excise tax rate
\nTobacco 100%
\nSoft drinks 50%
\nEnergy drinks 100%<\/p>\n
Article 1 of the Implementation Regulations defines the excisable goods as:<\/p>\n
Tobacco: Includes all items listed within Schedule 24 of the GCC Common Customs Tariff that are imported, cultivated or produced in the Kingdom.<\/p>\n
Soft drinks: Any aerated beverage except unflavored aerated water. Soft drinks include any concentrates, powder, gel, or extracts intended to be made into an aerated beverage.<\/p>\n
Energy drinks: Any beverages marketed or sold as an energy drink that may contain stimulant substances that provide mental and physical stimulation, which includes without limitation caffeine, taurine, ginseng and guarana. This also includes any substance that has an identical or similar effect as the aforementioned substances.<\/p>\n
When to register for Excise Tax in Bahrain?
\nBased on Article 7 of the Excise Tax Law and Article 8 of the Implementation Regulations, persons exercising or intending to exercise any of the below activities are required to register for excise tax in Bahrain:<\/p>\n
Importation of excisable goods
\nProduction of excisable goods
\nPossession of excisable goods under the tax suspension status
\nBusinesses required to register for Excise Tax purposes had to submit the registration application to the MoF by 15 January 2018.<\/p>\n
Based on Article 48 of the Implementation Regulations, excise tax is due on excisable goods that are available in Bahrain under the Excise Tax Law effective date (30 December 2017), given that such excisable goods are:<\/p>\n
Not under tax suspension status
\nHeld for commercial purposes
\nThe same provision (Article 48 of the Implementation Regulations) provides that persons who hold stocks of excisable goods that satisfy the above conditions, are required to file a transitional excise tax return and pay the applicable excise tax within 30 days of the effective date of the Implementation Regulations.<\/p>\n
What penalties under the excise tax law?
\nAdministrative penalties
\nSave for tax evasion cases provided for in Article (26) of Excise Tax Law, administrative fines shall be imposed on each person who:
\nBreaches the provisions of paragraph (A) of Article (14) Excise Tax Law at a percentage neither exceeds (25%) nor below (5%) of the tax amount that should have been declared.
\nAbstains from paying the due tax within the period indicated in the Regulations, at a percentage of (5%) of the unpaid tax amount for each month or part of a month the tax amount is unpaid.<\/p>\n
Without prejudice to any crime provided for in any other law, an administrative fine of a maximum of five thousand dinars shall be imposed on any person who:
\nPrevents or impedes the Ministry staff from performing their job duties.
\nAbstains from providing any information required by the Ministry
\nBreaches any other provision of the Law or the Regulations.<\/p>\n
Where the same violation is repeated within three years from the issued date of the Ministry\u2019s
\ndecision establishing the violation, the prescribed administrative fine may be doubled against the offender according to such decision or the license may be suspended for a maximum period of six months or both.<\/p>\n
Tax Evasion<\/p>\n
For the purposes of the provisions of this Article, tax evasion shall mean the following:
\nEntering or attempting to enter Excise Goods into the Kingdom or moving such goods outside the Kingdom without payment of due Tax, be it in part or in full.
\nProducing, transferring, acquiring, storing, transporting or receiving Excise Goods with unpaid Due Tax with the intent of evading due Tax payment.
\nProviding incorrect, fraudulent or fabricated documents, returns or records or placing false labels with the intent of evading due tax or recovering it unlawfully.
\nCarrying out any activities referred in Article of Excise tax law without registration.<\/p>\n
Any person who engages in any form of tax evasion, as referred to in Article (26) Excise Tax Law, shall be punished by imprisonment for at least one month and at most one year and fined at an amount not less than one time the amount of tax due and not exceeding two times the amount of tax due or one of these. Moreover, the perpetrator shall be condemned to pay the amount of tax due. In case of recurrence within three years from pronouncing the final verdict, the Court may double the maximum ceiling of the prescribed penalty and suspend the License temporarily or definitively.<\/p>\n
For more details, please refer the excise tax law.<\/p>\n","protected":false},"excerpt":{"rendered":"
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