Bahrain set to introduce VAT in 2019

Pedro Gonçalves
clock • 1 min read

Bahrain’s parliament has approved the introduction of a 5% value-added tax (VAT) in the kingdom from January 1 2019, as it looks to curb its debt after years of lower oil prices.

The bill, which would see Bahrain join the UAE and Saudi Arabia in implementing VAT, must also be approved by the parliament’s Upper House, which is expected to hold a similar session later this week, according to the state-run Bahrain News Agency (BNA).

VAT and changes to the pension system are part of efforts to fix public finances hit hard by the drop in oil prices which also pushed Bahrain’s dinar to its lowest in more than a decade.

The move came a few days after Bahrain’s wealthier neighbours Saudi Arabia, the United Arab Emirates and Kuwait offered a $10bn aid package to avoid the risk of a debt crisis in the country, which was also tied to fiscal reforms.

Bahrainis and expats told local media they were concerned about the prospect of rising costs of living, as the VAT is to be introduced next January. Businesses caught evading VAT will face stiff penalties, said Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa.