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Fri 29 Jul 2016 12:02 AM

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VAT in Bahrain could result in $568m windfall, says IMF

The 5% tax is likely to be introduced by January 2018, could also result in increased inflation

VAT in Bahrain could result in $568m windfall, says IMF
Bahrain World Trade Centre, Bahrain skyline, Bahrain business, Bahrain economy

The introduction of a 5 percent VAT rate in Bahrain by January 2018 is likely to result in increased inflation and $568 million in revenues, according to estimates by the International Monetary Fund (IMF).

The revenue is equal to about 1.6 percent of Bahrain’s GDP, estimated at $35.5 billion in 2015, according to the data reported by Gulf Daily News.

Bahrain’s inflation rate averaged 2.27 percent from 2008 to 2016. It reached an all-time high of 5.33 percent in January 2009 and an all-time low of -2.06 percent in March 2011.

In June, consumer prices had increased 3.3 percent year on year, marking the lowest record since March, according to Data from Informatics and e-Government Authority (IGA).

Experts from Global advisory firm PricewaterhouseCoopers’ (PwC) in Bahrain said prices are expected to increase by the amount of VAT, but that it is up to suppliers to determine the price of their goods and services.

All GCC countries are expected to set up the VAT in the next three years. The tax will apply to all goods and services except basic food products, healthcare and education.

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Karim Mansouri 3 years ago

The IMF is a part of the Rothschild Rockefeller Bilderberg group that control America, Israel, and the EU. The IMF is a tool to control countries that are not aware of the dangers that the Rothschild group brings to countries. Bahrain would have sacrificed some of their sovereignty to secure the IMF loan, Good luck to the Bahraini people, it would have been better to remove the IMF people from Bahrain.

Bahraini 3 years ago

Sadly the problems in Bahrain are my systematic and deep routed than any one policy change can change. The issues are deep and involve people as well as systems. As a Bahraini in the private sector is pains me to see our real purchasing power decline year after year whilst I see some (not all) in government jobs being offered social housing, benefits etc. If Bahrain was to emulate Singapore then 80% of the population would be in public housing. If housing was sorted than Bahrainis would have a lot more disposable income.