Bahrain VAT Tax Groups

What are Bahrain VAT Tax Groups?

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Earlier this year NBR has accepted the proposals of forming VAT group. But what if two or more related or associated persons work for similar objective, there comes the concept of Group registration.Therefore, two or more persons carrying on business together can apply for VAT registration as a Tax Group. The person associated here can be registered as a group only for tax purpose. It may also happen that, if related parties do not apply for group registration, then tax authorities will identify them and register them as group. All entities in a group are jointly and severally Liable for VAT Liabilities.

Conditions to be Satisfied

Any person or group of person, who wishes to be registered as a VAT group needs to satisfy all of the below mentioned conditions as specified by NBR:

  1. Each of the applicants desirous of forming VAT group is a legal person. 
  2. Each of them has a place of establishment or fixed establishment in the Bahrain.
  3. All should conduct an economic activity.
  4. All should be a registered under VAT.
  5. None of applicants is a member of another VAT group in Bahrain.
  6. They should be related parties as per VAT law of Bahrain, which means One of them has authority to supervise or direct over other members or All of the members are directed and supervised by a common person. 

Benefits

A person or a group of person, who register under VAT Law as a Group tax, has the following benefits:

  1. All entities will have to file a single return. 
  2. Compliance also needs to be made at group level, which in turn reduces the work load significantly.
  3. Supplies within group will not be charged any VAT i.e. suppliers between entities within a group are not under the purview of VAT.
  4. It will save cash outflow, hence economical and less time consuming.

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