Bahrain’s biggest businesses prepare for their first VAT return
By the end of the month (April 2019), Bahraini businesses will have to submit their first ever VAT return within the country, becoming the third of the six Gulf Cooperation Council (GCC) member states to do so.
Ongoing internal changes to reporting systems and technology will have to go live very soon. As well as integrating ERP systems to record VAT amounts and transactions, opening additional accounting general ledgers to capture payable and receivable VAT is critical. General ledgers contribute to the recording of output VAT, input VAT, blocked VAT expenses and VAT clearing accounts.
In addition to the changing internal processes, there will be significant differences with tax codes. The mapping of a business’ transactions (both sales& purchases) ensures it is possible to apply tax codes or VAT treatments depending on the type of transaction.
While most goods and services are considered ‘standard-rated’ (where VAT is charged at 5%), there are certain supplies that are ‘zero-rated’ and will incur no VAT. With zero-rated supplies, at least two codes are generally needed: one for zero-rated domestic sales and one for exports to customers outside the GCC as these need to be reported separately.