Bahrain’s parliament has approved the introduction of 5 percent value-added tax (VAT) in the kingdom from January 1 2019, it was announced on Sunday.
According to the state-run Bahrain News Agency (BNA), the country’s House of Representatives voted on the introduction of VAT in an extraordinary session ordered by royal decree.
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.
“The introduction of VAT will be a big challenge for the local Bahrain market,” said Michael Camburn, Bahrain Indirect Tax Leader at Deloitte Middle East. “Businesses now have less than four months to be prepared for these changes.”
Camburn added that “if organisations have so far not yet started, they should start immediately assessing the impact of the tax on their operations.”
The implementation of VAT was one of a number of reforms announced by Bahraini authorities, which also includes changes to its pension system and a new subsidy programme.
Last week, Bahrain announced a fiscal overhaul meant to balance its budget by 2022, backed up by a $10 billion economic support package from Saudi Arabia, the UAE and Kuwait.
The plan aims to $2.1 billion a year as Bahrain looks to curb its debt after years of lower oil prices.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.