Industry - Law Firms

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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Industry - Law Firms

Tue Oct 16, 2018 11:26 am

Is my law firm required to register for VAT in the BAHRAIN?
Any law firm in the BAHRAIN with an annual turnover of BHD 37,700 or above is liable to register for VAT. These firms are also required to charge VAT on the legal services they provide to their clients. But VAT is not applicable on the salary paid to the lawyers working for a law company.

International law firms that provide taxable legal services or conduct business transactions in the BAHRAIN are required to register for VAT, irrespective of their turnover.

What is the VAT rate on the legal services I provide?
All VAT registered law firms in the BAHRAIN are required to charge a standard rate of five percent on their services.

Can I recover the VAT that I’ve paid on input costs for my law firm?

Yes, any BAHRAIN VAT registered law firm can claim input tax credit for the VAT paid on input costs.

How does the reverse charge mechanism work for law firms?
When an unregistered law firm that is not required to register for VAT provides services to a VAT registered person or a company in the BAHRAIN, those services are exempt from VAT. In such cases, the registered person or company receiving the services must pay VAT directly to the government.

What will attract a penalty for my law firm?
The following offences made by a law firm will attract a penalty:

  • If a law firm that is liable to register for VAT does not register before the last date of registration
  • If a law firm does not file VAT returns at all
  • If a law firm does not file VAT returns on time
  • If a law firm files wrongful returns
  • If there is tax evasion

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