It depends whether the accommodation is considered residential or commercial.
- If the labourers are provided with an accommodation in a residential building, then it is tax exempt.
- If there are additional services provided along with the accommodation, then it is considered commercial and subject to the standard VAT rate of 5%.
When is a labour accommodation considered a residential property in the BAHRAIN?
A labour accommodation is considered to be residential when the following conditions are met:
- Employees have occupied the building as their principal place of residence.
- The building is immovable and is fixed to the ground.
- The building has been constructed or converted into a residential property legally.
- There are no additional services provided along with accommodation (as in the case of a hotel, bed and breakfast establishment, or serviced apartment).
When is a labour accommodation considered a serviced accommodation?
If the following additional services are provided along with accommodation, it is considered a serviced accommodation.
- Telephone and internet access
- Cleaning services provided for rooms other than the communal areas
- Changing of bed linen on a regular basis along with laundry services
- Catering services
- General maintenances services provided for the rooms (in addition to the services provided for the upkeep of the whole property)
What are some of the services provided as part of residential property?
The following services are typically provided at no extra charge and are considered a part of residential property.
- Cleaning of communal areas
- Services provided for the maintenance of the property
- Pest control
- Garbage control
- Utilities such as electricity and water
- Access to general facilities such as launderettes, gyms, pools, or prayer rooms