Supply under VAT [General FAQs]

Here you would know the basics and essentials on the workings of VAT in Bahrain. This is a must read and educative knowledgebase for those new to applying VAT within an Organization.
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Supply under VAT [General FAQs]

Fri Oct 12, 2018 4:39 am

What is a supply?
Supply refers to goods or services that are exchanged for consideration (payment). Supply occurs when there’s a transaction between two people and at least one of them is a registered taxpayer. Supply includes buying, selling and stock transfers, even if there is no exchange of money.

What are the types of supply?
Taxable supply: When a supply takes place within the BAHRAIN, it falls within the scope of the BAHRAIN VAT, and will be considered taxable supply.

Out-of-scope supply: When a supply takes place outside BAHRAIN, it is outside the scope of the BAHRAIN VAT.

Do I need to pay VAT on sale or purchase of pre-owned goods?
Yes, the Tax Authority has issued guidelines to charge 5% VAT on sale or purchase of pre-owned goods such as vehicles and furnitures. However, the amount on which VAT to be levied depends on when the item was purchased.

If the item was purchased before VAT was implemented (January 1st, 2019) and is sold anytime after that, the VAT needs to be applied on the total selling price.

If an item was purchased and sold after VAT was implemented, then VAT needs to be applied on the profit margin. The VAT will be levied on the profit margin, since the seller of the pre-owned goods would have already been taxed at the time of purchase.

Pre-owned goods imported into BAHRAIN doesn’t qualify for this scheme. Import of pre-owned goods are always subject to VAT on the total price.

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