Bahrain parliament approves decision to double VAT to 10%

On Wednesday, Bahrain’s parliament approved a bill to double the country’s Value Added Tax (VAT) from the existing 5 per cent to 10 per cent.

The bill has now been sent to the Shura Council, and if approved by the upper chamber, it will likely be introduced starting January 1, 2022.

Alongside approving the VAT bill, MPs in Bahrain also on Wednesday approved increasing social welfare and support allowances by 10 per cent.

Under the new social welfare system to be implemented from January 1, a low-income Bahraini would receive BD77 monthly, a couple would receive BD132 up from the current BD120, and each child BD25 (unchanged) but with the BD150 cap removed for the total given to a family.

في جلسة مجلس النواب:
لموافقة على مشروع قانون بتعديل “قانون الضمان الاجتماعي”
الموافقة على مشروع قانون بتعديل “قانون ضريبة القيمة المضافة”#مجلس_النواب #البحرين #البحرين_اليوم #النواب #مملكة_البحرين #فوزية_زينل #مملكة_البحرين #ضريبة_القيمة_المضافةhttps://t.co/itrYU0JHpv pic.twitter.com/xckcVAebPA

— مجلس النواب -Bahrain (@BhParliament) December 8, 2021

The Gulf’s smallest economy is seeking ways to cut spending and bring its budget back into balance by 2024.

In 2018, Saudi Arabia and the UAE introduced a 5 per cent VAT. Last year, Saudi tripled its VAT to 15 per cent. In November 2020, Saeed Rashid Al-Yateem, assistant undersecretary for Resources and Budget Affairs, reasserted the stance of the UAE to maintain its VAT of 5 per cent for the moment.

In April this year, Oman introduced a 5 per cent VAT on goods and services.

Kuwait and Qatar, the other two GCC state, have yet to implement the tax.