BAHRAIN: VAT Economic Activity Guide – who is VAT taxable person?

This guide sets out general principles relating to the concept of an economic activity for VAT purposes.

If a person is carrying out an economic activity in Bahrain, he may be required to register and account for VAT. The purpose of this Guide is to help a person determine whether or not he is conducting an economic activity for VAT purposes.

Generally, one may think of conducting an economic activity as conducting a business, and in many cases, it will be apparent whether a person is conducting an economic activity. However, the VAT Law and Regulations set out specific additional features that will need to be considered to establish the existence of an economic activity.

VATable persons in Bahrain are required to charge VAT on their supplies of goods and services. A VATable person is a Person carrying out an economic activity independently for the purposes of generating income, and who is registered or obliged to register for VAT purposes in accordance with the provisions of the law.

The VAT Law defines “economic activity” as:

“An activity conducted in an ongoing and regular manner for the purpose of generating income, and includes commercial, industrial, agricultural, or professional activities or services or any use of tangible or intangible assets, and any other similar activity.”

Types of economic activity in the VAT Law:

It is clear from the definition of “economic activity” in the VAT Law that the term should be interpreted widely. The Law includes the following activities as specifically falling within the definition:

• Commercial activities;
• Industrial activities;
• Agricultural activities;
• Professional activities;
• Services or any use of tangible or intangible assets; and
• Any other similar activity.

The above list is indicative and not exhaustive.

Read the all of the VAT economic activity  Guide for Bahrain by clicking on this link.

Source – VATupdate.com