The news of Bahrain VAT (Value Added Tax) introduction is growing stronger. The most probable date set is start of Jan 2019. Yet there in no official confirmation of the date. In order for businesses to be compliant to the government requirements a business system should have minimum feature in place. Below we mention few scenarios how our Bahrain VAT software would calculate VAT while buying and selling of goods and services
Scenario 1 -All items equally charged
A business my purchase goods or services at flat rate of 5% VAT. All goods and services sold by the business is taxable so the VAT rules would be written for all products at company level. System would calculate Bahrain VAT irrespective of item type or customer served.
Scenario 2 – Mixed items
Business may buy goods that are mixed of chargeable and non-chargeable. Whilst the system will calculate VAT on every item it needs to understand goods on which Bahrain VAT is not taxed. Goods can be excluded from taxation by adding simple rule of exclusion at item level. System will calculate VAT on all items except the items on which VAT has been excluded.
Scenario 3 – Servicing non-taxable customer
There are no official information on which industry will be excluded from taxation. However, rumor has been that health and education would be excluded from Bahrain VAT. Our system can charge Bahrain VAT for a particular product to every type of customer except the ones which have been excluded by the Bahrain government. If your business is selling a taxable item to XYZ Supermarket the system would exclude taxation to ABC School.
Scenario 4 – Exports
It is highly probable that Bahrain VAT would not be applied on export of items. Our system can exclude taxation of any customer based on location like exporting to Kuwait maybe excluded as it would not be implementing VAT till 2021 but charging Bahrain VAT for exporting to customer in KSA.
Scenario 5 – In-house non-chargeable services
Companies that are providing services through their in-house team would not have any purchase. This scenario is for consultancy companies or IT companies that build solution internally. As there is no external supplier there is no payment of Bahrain VAT. However, when offering their services to customer they would be collecting VAT. Our system is able to differentiate it and give accurate report of VAT collected during any period of time.
Irrespective of the design or methodology of Bahrain VAT calculation and reporting; solution offered by us would be able to cater to every need of business. Contact us to get more information and to understand how we can assist you with Bahrain VAT integration.