Bahrain vat law

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This document is an unofficial English Translation of Decree 48 of 2018 issuing the VAT
Law in the Kingdom of Bahrain. We have translated this document to the best of our
ability and based on our interpretation of the Arabic text of the Law.
The English Translation is merely for information and awareness purposes only.

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Decree-Law No. 48 of 2018
Issuing the VAT Law
We, Hamad bin Isa Al Khalifa King of the Kingdom of Bahrain.
Having reviewed the Constitution:
i. In particular Article (38) thereof, and the Civil and Commercial Procedures Law
promulgated by Legislative Decree No. 12 of 1971, as amended,
ii. The Penal Code promulgated by Legislative Decree No. (15) of 1976, as amended,
iii. And the Trade Law promulgated by Legislative Decree No. 7 of 1987, as amended,
iv. And Decree-Law No. (10) of 1990 regarding the Control of Pearls and Precious
Stones of Value, amended by Decree-Law No. (65) for the year 2014,
v. And the Civil Law promulgated by Legislative Decree No. (19) for the year 2001, as
amended by Law No. (27) for the year 2017,
vi. The Commercial Companies Law promulgated by Legislative Decree No. (21) of
2001, as amended,
vii. Decree-Law No. (10) of 2002 approving the Common Customs Law of the GCC
States,
viii. Decree-Law No. (39) of 2002 on the general budget, as amended,
ix. The Code of Criminal Procedures promulgated by Legislative Decree No. 46 of 2002,
as amended,
x. The Central Bank of Bahrain Law and Financial Institutions promulgated by Law No.
(64) for the year 2006, as amended,
xi. Law No. 16 of 2014 on the Protection of State Information and Documents,
xii. Decree-Law No. (27) for the year 2015 on the Commercial Register,
xiii. Law No. (18) of 2016 on Investment for Limited Partnerships,
xiv. Decree Law No. (47) of 2018 on the ratification of the Common VAT Agreement of
the States of the Gulf Cooperation Council (GCC).
Based on the Proposal of the Prime Minister,
And Pursuant to the Council of Ministers' Approval,

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We have drawn up the following Law:
Article I
The provisions of the Value Added Tax Law attached to this Law shall inter into force.
Article II
The Minister may, pursuant to the approval of the Cabinet, prescribe the Rate of Taxes and
Administrative Penalties collected for the purpose of covering requests for Tax Refunds in
accordance with the application of the Tax Laws in the Kingdom.
The Tax amounts collected from Taxpayers shall be deposited in a separate account with one
a credible and competent bank. Withdrawal of the Tax amounts shall be made in accordance
with the Reverse Charge Mechanism prescribed under the application of the Tax Laws
implemented in the Kingdom.
Article III
The Minister shall issue, pursuant to the approval of the Cabinet, the Executive Regulations
of this Law within Fifteen days following the date the Minister received it.
Article IV
The Prime Minister and the Ministers each, within the capacity of his authority, shall
implement this Law and it shall inter into force effectively from 1 January 2019, and published
in the Official Gazette, provided that the provisions of Article (77) of this Law shall apply on
the day following its date of publication.
King of the Kingdom of Bahrain
Hamad bin Isa Al Khalifa
Prime Minister
Khalifa bin Salman Al Khalifa
Issued at Riffa Palace:
Date: 25 Muharram 1440 AH
Corresponding to: October 5, 2018 AD

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Contents
Chapter One: Transitional Provisions ............................................................................................7
Article (1): Definitions ...................................................................................................................7
Chapter Two: Scope of Tax and Rate ..............................................................................................9
Article (2): Scope of Tax.................................................................................................................9
Article (3): Tax Rate.........................................................................................................................9
Article (4): Persons Required to Pay Tax ..................................................................................10
Chapter Three: Supply.....................................................................................................................10
Article (5): Supply of Goods .......................................................................................................10
Article (6): Supply of Services ....................................................................................................11
Article (7): Issuance of Vouchers................................................................................................11
Article (8): Supply on behalf of another Person......................................................................11
Article (9): Supplies by Government Entities..........................................................................11
Article (10): Deemed Supply.......................................................................................................11
Article (11): Cessation of Economic Activity............................................................................12
Chapter Four: Tax Due Date .......................................................................................................12
Article (12): Date of Tax Due on Supply of Goods and Services in General.....................12
Article (13): Date of Tax Due on Supply of Goods and Services in Special Cases...........12
Chapter Five: Place of Supply ........................................................................................................13
Article (14): Place of Supply of Goods......................................................................................13
Article (15): Place of Supply of Energy and Water..................................................................13
Article (16): Place of Supply of Services...................................................................................13
Article (17): Place of Supply of other Services.........................................................................13
Article (18): Place of Supply of Wired and Wireless Telecommunication Services and
Electronic Services .......................................................................................................................14
Chapter Six: Imports.........................................................................................................................14
Article (19): Place of Import.........................................................................................................14
Chapter Seven: Value of Supply and Import ..............................................................................14
Article (20): Value of Supply ......................................................................................................14
Article (21): Value of Imported Goods......................................................................................15
Article (22): Value of Supply between Related Persons........................................................15
Article (23): Value of Deemed Supply ......................................................................................15
Article (24): Value of Supplies after Discount.........................................................................15
Article (25): Value of Supply of Vouchers ...............................................................................16

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Article (26): The Value of Re-Importation after Transportation and Temporary Export of
the Goods........................................................................................................................................16
Article (27): Value of Supply Based on Profit Margin...........................................................16
Article (28): Adjustment of the Value of the Supply..............................................................16
Chapter Eight: Registration.............................................................................................................17
Article (29): Mandatory Registration.........................................................................................17
Article (30): Registration of the Tax Group..............................................................................17
Article (31): Registration of Related Persons by the Tax Authority ....................................17
Article (32): Registration Exceptions .........................................................................................17
Article (33): Voluntary Registration ..........................................................................................18
Article (34): Deregistration..........................................................................................................18
Chapter Nine: Tax Period and Tax Return...................................................................................18
Article (35): Tax Period.................................................................................................................18
Article (36): Filing the Tax Return..............................................................................................19
Article (37): Amending the Tax Return.....................................................................................19
Chapter Ten: Tax Invoice.................................................................................................................19
Article (38): Issuance of the Tax Invoice...................................................................................19
Article (39): Date of Issuance of Invoice...................................................................................20
Article (40): The Currency used in the Tax Invoice ................................................................20
Article (41): Amendment of Tax Invoice (Issuance of Debit/Credit Notes).......................20
Chapter Eleven: Deduction and Tax Settlement.........................................................................20
Article (42): Input Tax Deduction ..............................................................................................20
Article (43): Terms of Deduction of the Input Tax..................................................................21
Article (44): Deduction of Input Tax Paid before Tax Registration.....................................21
Article (45): Proportional Deduction of Input Tax..................................................................21
Article (46): Adjustment of Deductible Input Tax..................................................................21
Article (47): Input Tax on Capital Assets..................................................................................22
Article (48): Payable Tax Settlement..........................................................................................22
Article (49): The Authority's Assessment for the Net Tax.....................................................22
Chapter Twelve: Payment of Tax...................................................................................................22
Article (50): Payment of the Tax Due on the Supply..............................................................22
Article (51): Repayment of Tax Due upon Importation.........................................................22
Article (52): Tax Suspension........................................................................................................23
Chapter Thirteen: Tax subject to Zero-Rate.................................................................................23
Article (53): Taxable Goods and Services that is subject to Zero Rate................................23
Chapter Fourteen: Exemptions .......................................................................................................24

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Article (54): Supply of Financial Services ................................................................................24
Article (55): Supply of Vacant Lands and Buildings..............................................................24
Article (56): Exemptions of Import.............................................................................................24
Chapter Fifteen: Tax Refund and Carrying Forward the Surplus ...........................................25
Article (57): Tax Refund...............................................................................................................25
Article (58): Carrying Forward the Surplus of Refundable Tax...........................................25
Chapter Sixteen: Judicial Enforcement.........................................................................................26
Article (59): Jurisdictions of Judicial Enforcement Officers .................................................26
Chapter Seventeen: Administrative Penalties.............................................................................26
Article (60): Cases that will attract Administrative Penalties...............................................26
Article (61): The Decision to Impose Administrative Penalties...........................................27
Article (62): Grievance and Appeal for the Decision of Administrative Penalties ..........27
Chapter Eighteen: Tax Evasion.......................................................................................................28
Article (63): Case of Tax Evasion................................................................................................28
Article (64): Penalties....................................................................................................................28
Chapter Nineteen: General Provisions.........................................................................................29
Article (65): Passage of time (Aging) .........................................................................................29
Article (66): Committee for Examination of Grievances and Tax Objections ...................29
Article (67): Tax Representative, Tax Agent and Appointed Persons .................................30
Article (68): Confidentiality of Information ............................................................................30
(Article 69): Retention of Records and Tax Invoices ..............................................................30
Article (70): Stating the Tax Identification Number...............................................................31
Article (71): Electronic System of Tax Collection and Payment...........................................31
Article (72): International Tax Treaties .....................................................................................31
Article (73): Coordinating with Government Entities............................................................31
Article (74): License and Tax Certification Fees ......................................................................31
Chapter Twenty: Transitional Provisions ....................................................................................31
Article (75): Date of Supply Post-Implementation of the Law.............................................31
Article (76): Contracts exclusive of Tax entered before the implementation of the Law 32
Article (77): Timeframe for Tax Registration...........................................................................32
Article (78): Intra-GCC Supplies................................................................................................33
Article (79): Treatment of non-Implementing States .............................................................33

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VAT Law
Chapter One
Transitional Provisions
Article (1)
Definitions
In the application of the provisions of this law, the following words and expressions shall
have the meanings assigned against each, unless the context otherwise requires:
1. The Kingdom: The territory of the Kingdom of Bahrain, including its land, subsoil,
territorial waters adjacent to it and the seabed, and all the rights of sovereignty exercised in
accordance with the provisions of international law.
2. Minister: Minister of Finance
3. The Authority: The National Authority for GCC Taxation established by Decree No. 45 of
the year.
4. The Council: Gulf Cooperation Council.
5. The Agreement: The Common VAT Agreement of the States of the GCC ratified by
Legislative Decree No. 47 of 2018.
6. Common Customs Law: Decree-Law No. (10) for the year 2002 approving the Common
Customs Law of the States of the GCC.
7. First Point of Entry: First customs point of entry through which Goods enter the GCC
Territory from abroad in accordance with the Common Customs Law.
8. Final Destination Point of Entry: Customs point of entry through which Goods enter the
Final Destination State within the GCC Territory.
9. Tax: Valued Added Tax (VAT) imposed on the import and supply of Goods and Services at
each stage of production and distribution, including Deemed Supplies.
10. Deemed Supply: Activities that are considered as a Supply and treated as a Taxable Supply
in accordance with the cases stipulated in this Law.
11. Supply: Any form of supply of Goods and Services for Consideration, in accordance with
the provisions of the Law.
12. Implementing States: The GCC States that are implementing a tax law pursuant to an
issued local legislation.
13. Person: Any natural or legal Person, public or private, or any other form of partnership.
14. Taxable Person: A Person conducting an Economic Activity independently for the purpose
of generating income, who is registered or obligated to register for VAT in accordance with
the provisions of this Agreement.
15. Taxable Trader: Taxable in any Implementing State and whose main activity is the
distribution of Oil, Gas, Water or Electricity.
16. Economic Activity: An activity that is conducted in an ongoing and regular manner for the
purpose of generating income, including commercial, industrial, agricultural or professional
activities or Services or any use of material or immaterial property and any other similar
activity.
17. Goods: All types of material property (material assets), including water and all forms of
energy including electricity, gas, lighting, heating, cooling and air conditioning.
18. Import of Goods: The entry of Goods into the Kingdom from outside the implementing
GCC States Territory in accordance with the provisions of the Common Customs Law.
19. Export of Goods: Supply of Goods from the Kingdom to outside of the implementing GCC
States Territory in accordance with the provisions of the Common Customs Law.
20. Services: Anything that is not a good, whether it was local or imported.

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21. Taxable Supplies: Supplies on which Tax is charged in accordance with the provisions of
the Agreement, whether at the Standard Rate or Zero-Rate, and for which associated Input
Tax is deducted in accordance with the provisions of the Agreement.
22. Input Tax: Tax borne by a Taxable Person in relation to Goods or Services Supplied to him
or imported for the purpose of carrying on the Economic Activity.
23. Exempted Supplies: Supplies on which no Tax is charged and for which associated Input
Tax is not deducted pursuant to the provisions of this Law.
24. Tax Identification Number (TIN): The unique tax identification number issued by the
Authority for each Person registered for Tax purposes.
25. Tax Group: Two or more Persons registered with the Authority for Tax purposes and are
treated as a single Taxable Person in accordance with the provisions of this Law.
26. Consideration: Everything collected or to be collected by the Taxable Supplier from the
Customer or a third party for the Supply of Goods or Services inclusive of the Tax.
27. Importer: A Person whose name is listed as the importer of the Goods with the Customs
authority in accordance with the provisions of the Common Customs Law.
28. Supplier: A Person who Supplies Goods or Services.
29. Customer: A Person who receives Goods or Services.
30. Resident Person: A Person that has a Place of Residence in the Kingdom.
31. Non-Resident Person: A Person that does not have a Place of Residence in the Kingdom.
32. Place of Residence of a Person: The location of Place of Business or any other type of Fixed
Establishment is. In the case of a Natural Person, if he does not have a Place of Business or
Fixed Establishment, it will be his usual Place of Residence. If a Person has a Place of
Residence in more than one State, the Place of Residence will be considered to be in the place
most closely connected with the Supply.
33. Place of Business: The place where a business is legally established, or where its actual
management center is located where key business decisions are made if different from the
place of establishment.
34. Fixed Establishment: Any fixed location for a Business other than the Place of Business, in
which the business is carried out and is distinguished by the permanent presence of human
and technical resources in such a way as to enable the Person to supply or receive Goods or
Services.
35. Capital Assets: Material and immaterial assets that form part of a business’s assets allocated
for long-term use as a business instrument or means of investment.
36. Reverse Charge Mechanism: The mechanism by which the Taxable Customer is obligated to
pay the Tax due on behalf of the Supplier and is liable for all the obligations provided for in
this Agreement.
37. Related Persons: Two or more Persons where one of them has supervisory or directive
control over the others in such a way that he has administrative power that enables him to
influence the business of the other Persons from a financial, economic or regulatory aspect.
This includes Persons who are subject to the Authority of a third Person that enables him to
control their businesses from a financial, economic or regulatory aspect.
38. Deductible Tax: Input Tax that may be deducted from Tax Due on Supplies for each Tax
Period in accordance with the provisions of the Agreement.
39. Net Tax: Tax resulting from deducting the Deductible Tax in the Kingdom from the Tax due
in the Kingdom within the same Tax Period. Net Tax may either be payable or refundable.
40. Mandatory Registration Threshold: The minimum limit of the value of actual Supplies at
which the Taxable Person becomes obligated to register for Tax purposes.
41. Voluntary Registration Threshold: The minimum limit of the value of actual Supplies at
which the Taxable Person may apply to register for Tax purposes.

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42. Tax Return: The data and information specified for Tax purposes and should be filed by a
Taxable Person in accordance with a form prepared by the Authority for this purpose.
43. Tax Period: The period of time for which the Net Tax must be accounted for and file the Tax
Return.
44. Tax Invoice: All written or electronic documents the Taxable Person is committed to issue
together with the recorded details of the Supply pertaining to it.
45. Issuance of Credit/Debit Note: All written or electronic documents the Taxable Person is
committed to issue in the occurrence of any amendments on the Consideration of the Supply
in accordance with the provisions of the Law.
46. Voucher: Any instrument that gives the holder the right to receive Goods or Services
equivalent to the value stated thereon, or the right to receive a discount or reduction on the
price of the Goods or Services. Vouchers do not include postage stamps issued by the
Kingdom’s Post.
47. Market Value: The amount for which Goods or Services can be dealt in an open market
between two independent parties under certain competitive conditions, and does not
include any Tax.
48. Government Entities: Governmental and Local Ministries, Government Agencies,
Authorities and Public Institutions in the Kingdom.
49. Intra-Supplies: Supplies from a Supplier that is Resident in the Kingdom to a Customer
who resides in another Implementing State, or vice versa.
50. Sovereign Supplies: Supplies provided by government agencies as a single competent
Authority, with or without consideration.
51. Tax Representative: A Person licences by the Authority to represent a Taxable Non-Resident
Person in all matters related to his Tax obligations and rights.
52. Tax Agent: A Person licensed by the Authority to act on behalf of the Taxable Resident
Person in all matters relating to his Tax obligations and rights.
53. Regulations: The Executive Regulations for this Law.
Chapter Two
Scope of Tax and Rate
Article (2)
Scope of Tax
Tax shall be imposed on Taxable Supplies made by the Taxable Person in the Kingdom. Tax
is imposed on Goods and Services received by a Taxable Customer in the Kingdom in cases
where Reverse Tax Mechanism applies. Tax is imposed on the importation of Goods in
accordance with the provisions of this Law.
Article (3)
Tax Rate
A Standard Rate of 5% shall be imposed on the value of the Supply or Import without
prejudice to the special provisions in this Law on Exempt or Zero-Rate Supplies.
The declared price of Goods and Services in the local market shall include the value of the
Tax Due, in accordance with the terms and conditions specified in the Regulations.

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Article (4)
Persons Required to Pay Tax
The payment of tax shall be imposed on the following:
1. A Taxable Person who makes any Supply of Goods and Services in the Kingdom.
2. A Taxable Customer that receives Goods and Services in the Kingdom from a Non-
Resident Supplier based on Reverse Charge Mechanism, which should be disclosed in
the Tax Return.
3. Any Person that is assigned or recognised as an importer in accordance with the
provisions of the Common Customs Law is required to pay tax levied on the imported
Supply.
4. Any Person that recognises Tax in his Invoice issued in the Kingdom.
The Regulations shall specify the rules and procedures for the application of the provisions
of this Article.
Chapter Three
Supply
Article (5)
Supply of Goods
a) A Supply of Goods means the transfer of ownership of such Goods or the right to dispose of
the same as an owner. This shall include the following:
1. Disposal of Goods under an agreement that provides for the transfer of ownership of
these Goods or the possibility of transferring the same at a date after the date of the
agreement, which shall be no later than the date on which the Consideration is paid in
full;
2. Granting rights in rem deriving from ownership giving the right to use real estate;
3. Compulsory transfer of ownership of the Goods for Consideration pursuant to a decision
of the public authorities or by virtue of any applicable law.
4. A Taxable Person who transports Goods forming part of his assets from the Kingdom to
another place in an Implementing State, except for the following:
a) Evidence of use of the transported Goods in the other Implementing State
temporarily within the conditions of temporary entry provided for in the Common
Customs Law.
b) Where the transportation of Goods is done as part of another Taxable Supply Chain
in the other Implementing State.
b) The Regulations shall specify the rules and procedures for the application of the provisions
of this Article, including the provisions governing the Supply transactions of multiple
components at a single price, whether these components are Goods or Services.

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Article (6)
Supply of Services
Any Supply that does not constitute a Supply of Goods under this Agreement shall be
considered Supply of Services.
Article (7)
Issuance of Vouchers
The sale or issuance of a voucher shall not be considered a Supply unless the received
consideration exceeds its nominal value in accordance with the rules and conditions
specified in the Regulation.
Article (8)
Supply on behalf of another Person
If the Taxable Person Supplies or receives Goods or Services under his name on behalf of
another Person shall be deemed to have treated, for the purposes of the application of this
law, to have Supplied or received these Goods or Services to himself.
If the Taxable Person Supplies Goods or Services under the name and account of another
Person shall be deemed to have treated, for the purposes of the application of this law, to
have Supplied or received these Goods or Services on behalf of another Person.
Article (9)
Supplies by Government Entities
A government entity is regarded as making a Taxable Supply when carried out in a non-
sovereign capacity in the course of an Economic Activity in accordance with mechanisms
used to compete with the private sector.
A Cabinet Decision shall be issued by the Prime Minister to determine the government
entities, its Taxable Supplies, nature of the Tax Returns filed and its deregistration.
Article (10)
Deemed Supply
a) A Taxable Person shall be deemed to have made a Supply in the following cases:
1. Use or Disposal of Goods that form part of its assets for purposes other than Economic
Activity.
2. Changing the use of Goods to use for non-Taxable Supplies.
3. Retaining Goods owned at the date of deregistration after ceasing to carry out an
Economic Activity.
4. Disposal of Goods without Consideration, unless used as samples or nominal gifts for
the purpose of Economic Activity within the value specified by the Regulations.
5. Supply of services without Consideration.
b) The provisions of paragraph (a) of this Article shall apply if the Taxable Person has already
deducted Input Tax related to the Goods and Services mentioned in this Article.

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c) The regulation shall specify the detailed provision of the Deemed Supply
Article (11)
Cessation of Economic Activity
The ceasing of a Taxable Person’s Economic Activity or a part thereof shall not be considered
in favour of the Taxable Person in the Kingdom as a Supply for purposes of applying the
Law, with or without Consideration.
The Regulations shall specify the conditions and procedures required for the application of
the provisions of this Article.
Chapter Four
Tax Due Date
Article (12)
Date of Tax Due on Supply of Goods and Services in General
a) Tax is due on the date of the Supply of Goods or Services or date of issuance of the Tax
Invoice or upon partial or full receipt of Consideration, whichever comes first.
b) The Date of Supply of taxable Goods or Services are based on the following:
1. The date on which the transportation of Goods began, if the transportation was
supervised by the Supplier.
2. Date of the Supply is at the discretion of the Customer, if the transportation was not
supervised by the Supplier.
3. The date on which the assembly or installation of Goods was completed in connection
with Supplies of Goods with assembly or installation.
4. The date on which the performance of the Service was completed.
Article (13)
Date of Tax Due on Supply of Goods and Services in Special Cases
a) The date of Supply of Goods or Services in connection with any contract that includes
periodical payments or repetitive invoices shall be the earliest of any of the following
dates, provided that it does not exceed a 12-month period from the date of commencing
such Supply of Goods or Services.
1. The date of issuance of any Tax Invoice or any other similar document.
2. The date of payment is due as specified on the Tax Invoice.
3. The date of receipt of payment.
b) The date of Supply in cases where payment is made through vending machines, shall be
the date on which funds are collected from the machine.
c) The date of Deemed Supply of Goods or Services shall be the date of their Supply,
cession or disposal, change of usage or the date of Deregistration for each case as
specified in the Regulations.
d) The date of Customs Duty due or the date on which it was supposed to be due in
accordance with the provisions of the Common Customs Law.
e) The Date of a Supply of a voucher shall be the Date of Issuance or Supply thereafter.

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Chapter Five
Place of Supply
Article (14)
Place of Supply of Goods
a) The Place of Supply shall be in the Kingdom in the following cases:
1. Where the Goods are placed at the Customer’s disposal in the Kingdom for Supplies
without transportation and dispatch.
2. Where the Goods are located in the Kingdom when the transportation or dispatch
commences for Supplies with transportation or dispatch, whether transported or
dispatched by the Supplier or to the Customer’s account.
3. Where the assembly or installation of Goods Supplied was completed in the Kingdom.
b) For Intra-GCC Supplies:
1. The place of intra-GCC Supply shall be in the Kingdom where the Goods are located
when the transportation or dispatch ends, or the supplier is registered, or the supplier is
obligated to register.
2. The place of Intra-GCC Supply shall be in the Kingdom where the Goods are located
when the transportation or dispatch begins without installation or assembly by a
Supplier who is registered for Tax purposes in the Kingdom and the Customer is not
registered in the Implementing State, provided the value of Supplies of the Taxable
Person in the implementing, during any consecutive 12-month period, does not exceed
the mandatory registration threshold.
Article (15)
Place of Supply of Energy and Water
With the exception to the provision of Article (14) of this Law, the Place of Supply for gas, oil
and water through the pipeline distribution system, and supply of electricity through a
network of production, transportation and distribution of electricity, in accordance to the
following:
1. Where the Supply of the Taxable Person whose workplace is in the Kingdom to another
Taxable Trader whose workplace is in another Implementing State, the Place of Supply
shall be the place where the Taxable Trader is established.
2. Where the Supply is from a Taxable Person to a Person who is not a Taxable Trader, the
Place of Supply shall be the place of actual consumption.
Article (16)
Place of Supply of Services
The Place of Supply of Services shall be in the Kingdom when the Taxable Person is
Resident, with the exception that the Taxable Customer is not registered for Tax purposes in
any of the other Implementing States, otherwise the Place of Service shall be the Place of
Residence of the Customer.
Article (17)
Place of Supply of other Services
As an exception to the provision of Article (16) of this Law, the place of supply of other
services shall be specified in the following instances:

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1. Where the Supplier does not have a place of residence in the Kingdom, the Place of
Supply shall be the Taxable Customer’s place of residence.
2. Where the supply is related to leasing services of means of transport by a Taxable
Supplier to a Non-Taxable Customer, the Place of Supply shall be where the means of
transport is placed at the disposal of the Customer.
3. The place of supply for the following Supplies shall be the place of actual performance:
4. Restaurant, hotel, catering, food and drink services.
5. Cultural, artistic, sport, educational and recreational services.
6. Services linked to transported Goods Supplied from a taxable Supplier resident in the
Kingdom to a non-taxable Customer resident in another Implementing State.
7. The Place of Supply of real estate related Services shall be where the real estate is
located, in accordance to the provisions specified in the Regulations.
8. The Place of Supply of Services related to the transportation of Goods and Passengers
shall be where the transportation of Goods, passengers and related Services begins, in
accordance to the provisions specified in the Regulation.
Article (18)
Place of Supply of Wired and Wireless Telecommunication Services and Electronic
Services
The Place of Supply for wired and wireless telecommunications Services and electronic
Services shall be in the Kingdom, when the enjoyment from or actual use of Services is in the
Kingdom and within the limits of such enjoyment and usage, regardless of the place of
contract or payment of Consideration.
The Regulations shall specify the nature and types of wired and wireless telecommunication
Services and electronica Services.
Chapter Six
Imports
Article (19)
Place of Import
The Place of Import shall be in the Kingdom in the following cases:
1. The Kingdom is the First Point of Entry for the Goods Imported in the Council.
2. Where the Goods were released from Customs Duty suspension in the Kingdom after
being placed under Customs Duty suspension under the Common Customs Law
immediately upon entry into the GCC Territory.
Chapter Seven
Value of Supply and Import
Article (20)
Value of Supply
a) The Value of Supply is calculated on the basis of the value of Consideration excluding Tax
and shall include all expenses imposed by the Taxable Supplier on the Customer as well as

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the fees due as a result of the Supply and all Taxes due including Excise Tax, except for the
Tax.
b) If all or part of the Consideration was not monetary, the value of the Supply is calculated as
the total monetary value in addition to the Fair Market Value of the non-monetary value of
the Consideration, including all the expenses listed in Paragraph (a) of this Article, and shall
exclude Tax.
c) Tax Due in accordance with Reverse Charge Mechanism, the Value of Supply shall be the
purchase price. In the case that the purchase price cannot be determined, the Fair Market
Value shall depend on the date of receiving the Supply.
d) When the Consideration is related to matters in addition to the supply of Goods or Services,
the value of the supply is considered to be equivalent to the part of the Consideration that is
related to such supply
e) The Regulations shall specify the provisions and rules governing the application of the
provisions of this Article, as well as the terms and conditions specifying the Market Value.
Article (21)
Value of Imported Goods
The value of imported Goods shall be the customs value determined in accordance with the
Common Customs Law plus Excise Tax, Customs Duty and any other costs apart from Tax.
If the import value cannot be determined in accordance with the previous paragraph of this
Article, it shall be determined in accordance with the rules set out in the Common Customs
Law.
Article (22)
Value of Supply between Related Persons
With the exception of the provisions of Articles (20) and (21) of this Law, the value of the
Supply of Goods or Services between Related Persons shall be calculated on the basis of
Market Value when the Value of Supply is less than the Market Value and the Customer does
not have the right to recover the Input Tax deduction wholly.
The Regulations shall specify the terms and conditions on the application of this Article.
Article (23)
Value of Deemed Supply
The Value of Deemed Supply shall be calculated on the basis of the purchase value or the
actual cost of the Goods or Services Deemed to be Supplied.
When the value of the purchase or actual cost cannot be determined, the Fair Market Value
shall be the value of such Goods or Services.
Article (24)
Value of Supplies after Discount
The Value of Supplies can be discounted by the following:
:
1. Discounts on prices and deductions granted to the customer.
2. Subsidies granted by the State to the Supplier.

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3. The amounts by the Taxable Supplier on behalf of and to the Customer's account, in this
case the Taxable Supplier cannot deduct the Tax paid for such expenses.
The Regulations specifies the rules and conditions the Tax calculations after deduction.
Article (25)
Value of Supply of Vouchers
The Value of Supply of a Voucher shall be calculated based on the value of the difference
between the Consideration received by the Supplier of the Voucher and the nominal value
recorded on it.
Article (26)
The Value of Re-Importation after Transportation and Temporary Export of the Goods
If Goods are transported temporarily to one of the Implementing States, or exported for the
purpose of completion of manufacturing or repair, the final Value of the Goods shall be
taxed when re-imported to the Kingdom, on the basis of the added value to them as
provided thereon in accordance with the provisions of the Common Customs Law.
Article (27)
Value of Supply Based on Profit Margin
The Taxable Person may, in any Tax Period, and after the approval of the Authority, calculate
the value of the Supply of some Taxable Goods by using the Profit Margin mechanism in lieu
of the value of the Supply.
The Regulations shall specify the Goods to which the profit margin mechanism applies, and
the terms and condition required for the application of this Article.
Article (28)
Adjustment of the Value of the Supply
A Taxable Person may adjust the value of the Tax imposed upon any of the following events
taking place at a date later than the Supply date:
1. Total or partial cancellation or rejection of a Supply;
2. Reduction of the value of Supply
3. Total or partial non-collection of the Consideration in accordance with the conditions
applicable to bad debts.
4. The return of Goods or Services provided the Supplier approves such return.
The Taxable Person shall commit to amend the value of Supply in the occurrence of any
changes or substantial changes in the nature of the Supply, which will increase the amount
of Tax Due.
The Regulations shall specify the terms and conditions for the application of this Article.

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Chapter Eight
Registration
Article (29)
Mandatory Registration
a) The Mandatory Registration Threshold shall be the limit prescribed in paragraph (2) Article
(50) of the Agreement.
b) The Resident Taxable Person shall be required to register for Tax purposes in the following
cases:
1. Where the value of Supplies in the Kingdom exceeds the Mandatory Registration
Threshold over the previous 12-month period at the end of any month during the year.
2. Where it is anticipated, at any time, the value of Supplies in the Kingdom exceeds the
Mandatory Registration Threshold over the next 12-month period.
c) The Non-Resident shall be required to register in the Kingdom for Tax purposes, regardless
of the value of his Supplies, as long as he is obligated to pay Tax in the Kingdom. The Non-
Resident shall be required either to register directly or through the appointment of a Tax
Representative approved by the Authority. The Tax Representative shall take the place of
the Non-Resident in all his rights and obligations in accordance to the provisions prescribed
in Article (67) of the Law.
d) The Executive Regulations shall specify the conditions and procedures required for the
application of the provisions of this Article.
Article (30)
Registration of the Tax Group
Two or more Legal Persons that are Taxable and Resident in the Kingdom can apply for Tax
Registration as a single Tax Group, upon request, and upon fulfilment of the conditions and
procedures specified by the Regulations. All members of the tax group shall be jointly liable
for the Tax commitments of that group, arising during their term of office as members of the
Group.
In all cases, the Authority may amend the registration of the Tax Group or Deregister the Tax
Group in accordance with the terms, conditions and procedures specified in the Regulations.
Article (31)
Registration of Related Persons by the Tax Authority
The Authority can register the Related Persons automatically in accordance with the terms,
conditions and procedures specified in the Regulations.
Article (32)
Registration Exceptions
The Authority may exempt the taxable person from compulsory registration - at its request -
if its entire supply is subject to zero percentage. Upon approval of his exclusion from
compulsory registration, the taxable person shall notify the Regulatory Authority of any
amendments or changes in his activity that make him bound to register immediately upon
their occurrence in accordance with the dates and conditions and in accordance with the
procedures prescribed by the Regulations.

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In all cases, the Authority shall collect the tax and administrative fines payable by the taxable
person for the period in which he was excluded from the registration without right.
The Authority may make an exception to a Taxable Person from mandatory registration,
upon his request, if all his supplies are subject to Zero-Rate.
Article (33)
Voluntary Registration
a) The Mandatory Registration Threshold shall be the limit prescribed in paragraph (3) Article
(51) of the Agreement.
b) Non-obligated Persons, in accordance with the provisions of Article (29) of this Law, has the
right to request to be registered voluntarily for Tax purposes in the following cases:
1. If the Taxable Person proves, at the end of any given month, that the total value of his
Supplies or expenses during the previous 12-month period has exceeded the Voluntary
Registration Threshold.
2. If at any time, during the next 12-month period, the Taxable Person anticipates that the
value of Supplies or expenses will exceed the Voluntary Registration Threshold.
3. The Regulations shall specify the rules, procedures and conditions required for the
Article (34)
Deregistration
a) A Taxable Person who is registered for Tax purposes must apply for deregistration in any of
the following cases:
1. Cessation of carrying on of the Economic Activity;
2. Cessation of making Taxable Supplies; during any consecutive 12-month period.
3. If, at the end of any given month, the value of the Taxable Person’s returned Taxable
Supplies during the previous 12-month period falls below the Voluntary Registration
Threshold, and the Taxable Person does not anticipate the value of his Supplies or
expenses, during the next 12-month period, will exceed the Voluntary Registration
Threshold.
b) The Taxable Person shall apply for deregistration to the Authority if the value of his returned
Taxable Supplies, during the previous 12-month period, falls below the Mandatory
Registration Threshold and exceed the Voluntary Registration Threshold.
c) The Regulations shall specify the procedures, terms and conditions for deregistration, and the
rules governing the refusal to reject the deregistration.
Chapter Nine
Tax Period and Tax Return
Article (35)
Tax Period
The Regulations shall specify the Tax Period in which a Taxable Person is required to calculate
and pay the Tax, provided that the Tax Period shall not be less than one month. The deadlines
for the start and end of such Tax Period may vary depending on the Taxable Person, as well
as the cases in which it is permissible to make any amendments to extend or reduce the Tax
Period either by the Authority or at the request of the Taxable Person.

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Article (36)
Filing the Tax Return
The Taxable Person shall file a Tax Return for each Tax Period to the Authority and disclose
all the Supplies and Imports that he has made or received during such Tax Period, which is
based on the specimen form of the Tax Return prescribed by the Authority for such purposes,
and shall be no later than the last day of the month following the end of the relevant Tax
Period.
The Taxable Person shall commit to file such Tax Return even if he did not perform any
purchase, or Import, or Supply transactions during the Tax Period. If the Taxable Person fails
to file his Tax Return within the Tax Period prescribed in the First paragraph of this Article,
the Authority shall have the right to estimate the Tax owed for the Tax Period for which the
Taxable Person failed to file his Tax Return, the Authority shall also determine the bases of its
estimation, without prejudice to the criminal liability of the Taxable Person and the
administrative penalties prescribed in this Law.
Subject to the provisions of Article (61) of the Agreement, the Regulations shall specify the
requisite data that should be available in the Tax Return, the terms and conditions, and the
procedures for filing the Tax Return.
Article (37)
Amending the Tax Return
Subject to the provisions of Article (28) of this Law, the Taxable Person shall notify the
Authority if any changes are required to be made in his Tax Return and Tax Person shall make
the necessary amendments in such Tax Return to rectify it in accordance with the terms and
conditions and procedures specified by the Regulations.
Chapter Ten
Tax Invoice
Article (38)
Issuance of the Tax Invoice
A Taxable Person must issue an original Tax Invoice when Supplying Goods and Services,
including a Deemed Supply, or upon full or partial receipt of Consideration prior to the Date
of Supply.
Subject to the provisions of paragraph (1) of Article (56) of the Agreement, the Regulations
shall specify the data to be included in the Tax Invoice, the terms and procedures of its
issuance, including Tax Invoices issues electronically, and the cases in which the Authority
may except the Taxable Person from issuing the Tax Invoice and those cases under which it is
permissible to issue alternative documents in lieu of the Tax Invoice and its terms and
conditions, and the cases in which it is permissible for the Customer or for others on behalf of
the Customer to issue the Tax Invoice on behalf of the Supplier.

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Article (39)
Date of Issuance of Invoice
The taxable person must issue the Tax Invoice no later than Fifteen days from the end of the
month in which the supply took place.
Article (40)
The Currency used in the Tax Invoice
If the Supply is in any other currency, the amount stated in the Tax Invoice shall be converted
to Bahraini Dinars.
The conversion is based on the official currency exchange rate in force and approved by the
Central Bank of Bahrain on the Date of Supply.
Article (41)
Amendment of Tax Invoice (Issuance of Debit/Credit Notes)
a) A Taxable Person shall adjust the value of the Supply when one of the prescribed cases in
Article (28) of this Law occurs after the issuance of the Tax Invoice, such adjustment should
be issued in a document to complete the adjustment of the original tax invoice, in accordance
with the following:
1. If the Tax amount in the original Tax Invoice exceeds the actual value of the Supply, the
Taxable Person providing the Supply shall issue a Credit Note to the Customer.
2. If the Tax amount stated in the original Tax Invoice is lower than the actual value of the
Supply, the Taxable Person providing the Supply shall issue a Debit Note to the Customer.
b) In all cases, this document shall be treated the same treatment as the prescribed form for the
original Tax Invoice.
Chapter Eleven
Deduction and Tax Settlement
Article (42)
Input Tax Deduction
a) The Input Tax that is deductible by a Taxable Person for any Tax Period is the total of Input
Tax paid or due for payment for Goods and Services which have been used or intended to
be used for making any of the following transactions:
1. Taxable Supplies.
2. Supplies that are made outside the Kingdom which would have been Taxable in the
Kingdom.
b) Where Tax is paid on Goods imported by a Taxable Person from another Implementing
State and such State is the First Point of Entry in the GCC and the intended final destination
of those Goods was the Kingdom at the time of Import, then the Taxable Person shall be
entitled to treat the Tax paid in respect of the Imported Goods into the Kingdom as
Deductible Tax in the Kingdom.
c) With the consideration of Paragraph (1) of this Article, Input Tax that has been borne cannot
be Deductible in either of the following cases:
1. If it is paid on Goods or Services that are for purposes other than the Economic Activity
of the Taxable Person.
2. If it is paid on Goods that are prohibited when dealt in in the Kingdom.

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3. if it is paid on import and export activities that are Exempt in the Kingdom.
d) The Regulations shall specify the other cases where Input Tax cannot be Deductible.
Article (43)
Terms of Deduction of the Input Tax
The Deduction of Input Tax in any Tax Period requires the Taxable Person to receive and keep
record of the Tax Invoice or Customs documents that proves the Taxable Person is an importer
of the Goods related to the Supply or Import for which the Input Tax is due.
Article (44)
Deduction of Input Tax Paid before Tax Registration
Taxable Person can Deduct Input Tax paid on Goods and Services Supplied or Supplied to
him prior to the date of his registration on the Tax Return for the first Tax Period following
Tax Registration, if the following conditions are met:
1. Goods and Services are received for the purpose of making Taxable Supplies.
2. Goods were not supplied prior to the registration date.
3. Capital Assets were not fully depreciated before the date of registration.
4. Services were received within a specific period of time prior to the date of registration.
5. Receipt of Services within a period not exceeding six months prior to the date of
registration.
6. The goods and services shall not be subject to any restriction related to the right to Deduct
Input Tax prescribed in the Agreement and this Law.
Article (45)
Proportional Deduction of Input Tax
In cases where the Input Tax is related to Goods and Services used to make Taxable Supplies
and non-Taxable Supplies, then Input Tax may only be Deductible unless the Input Tax is
within the limits of the proportion referable to the Taxable Supplies.
The Regulations shall specify the methods of calculating the deduction rate and other terms
and conditions for the application of the provisions of this Article.
Article (46)
Adjustment of Deductible Input Tax
a) A Taxable Person must adjust the value of Input Tax deducted by him when receiving
Goods or Services supplied that are more or less than the value of the Input Tax deduction
available to him in the following cases:
1. Cancellation or rejection of a Supply;
2. Reduction of the Supply Consideration after the date of the Supply;
3. Non-payment of the Supply Consideration wholly or partially in accordance with the
terms of Bad Debts.
4. Changing the use of Capital Assets.
b) The Taxable Person is not required to adjust the Input Tax in any of the following cases:
1. Where the Taxable Person proves; loss of Imported Goods or Goods Supplied by him,
damage or theft of the Supplied Goods in accordance with the terms and conditions
specified by the Regulations.

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2. Where the Taxable Person uses the Supplied Goods as samples or gifts of insignificant
value as stipulated in Clause (4) of paragraph (a) of Article (10) of this Law.
Article (47)
Input Tax on Capital Assets
Input Tax shall be deductible for Capital Assets in accordance with the net book value of the
assets as on the date of registration.
The Regulations shall specify the calculation for deduction and settlement of Input Tax on
Capital Assets and the retention period of books and records pertaining to Capital Assets.
Article (48)
Payable Tax Settlement
Subject to the provisions of Article (41) of this Law, the Taxable Person shall settle the Tax Due
in the following cases:
1. If the Taxable Person falls under any of the cases stipulated in Article (28) of this Law,
resulting in an adjustment of the value of the Supply.
2. If Tax was imposed in an incorrect manner.
The Regulations shall specify the terms and conditions required for the settlement of the Tax.
Article (49)
The Authority's Assessment for the Net Tax
The Authority shall, in all cases, be entitled to estimate the Tax Due amount, if there was
evidence that the Taxable Person did not provide the correct calculations of the Tax, and such
estimations shall be based on plausible grounds in accordance with the data and documents
available to him.
The Regulations shall specify the provisions, rules and procedures governing the application
of this Article.
Chapter Twelve
Payment of tax
Article (50)
Payment of the Tax Due on the Supply
The Taxable Person shall pay the amount to the Authority together with the filing of his Tax
Return, in accordance with the rules and procedures prescribed by the Regulations.
Article (51)
Repayment of Tax Due upon Importation
a) Tax Due on imported Goods shall be paid to the Customs Affairs of the Ministry of Interior in
the Kingdom, if the Kingdom is the First Point of Entry, in accordance with the provisions of
this Law together with the procedures, regulations and conditions prescribed by the
Authority.

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b) Notwithstanding the provisions of paragraph (a) of this Article, the Authority may allow the
Taxable Importer to defer payment of the Tax Due on Goods imported for the purposes of the
Economic Activity.
In this case, the Taxable Importer shall declare the deffered payment of the Tax Due on Goods
Imported in his Tax Return. Tax Due that have been deferred and declared shall be deductible
in accordance with the provisions of this Law.
c) The Regulations shall specify the provisions, rules and procedures required for the application
of the provisions of this Article.
Article (52)
Tax Suspension
Tax shall be suspended on imports of Goods that are placed under a customs duty suspension
situation, in accordance with the terms and conditions stipulated in the Common Customs
Law. The Taxable Importer shall, in this case, provide a financial security covering the value
of the Tax calculated in accordance with the rules and regulations prescribed by the
Regulations.
Chapter Thirteen
Tax subject to Zero-Rate
Article (53)
Taxable Goods and Services that is subject to Zero Rate
The Zero Rate shall apply to the following transactions:
1. Export of Goods outside the Territory of the Implementing States.
2. Supply of Goods to one of customs duty suspension conditions stipulated in the Common
Customs Law or Supplied within customs duty suspension conditions.
3. Transport Services of Passengers and Goods from or to the Kingdom, which starts or ends
in the Kingdom or passes through its lands, including Transport-related Supplies and
Services.
4. Supply of preventive and basic health care Services and Goods and Services that are
related to it.
5. Supply or Import of medicines and medical equipment in coordination with the concerned
medical authorities in the Kingdom.
6. Re-export of movable Goods that have been temporarily imported into the Kingdom for
repairs, refurbishment, conversion or processing as well as the Services added to these
Goods.
7. The Supply of Services by a Taxable Supplier residing in the Kingdom for a Customer who
does not reside in the Territory of the Implementing States who benefits from the Service
outside the Territory of the Implementing States in accordance with the provisions of
Article (17) of this Law.
8. The Supply or Import of Gold, Silver and Platinum investments, provided the metal is at
a purity not less than (99%) and traded in the Global Bullion Exchange, and subject to the
issuance of certification of the purity of the metal by the concerned authority to examine
metals and precious stones of value in the Kingdom.
9. The first Supply after the extraction of Gold, Silver and Platinum for the trade purposes.

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10. The Supply and Import of pearls and precious stones, subject to the issuance of
certification by the concerned authority to examine pearls and stones of value and
determine their nature.
11. Construction of new buildings.
12. Supply of educational Services, and related Goods and Services for nurseries, preschool
education, primary, secondary and higher education.
13. Local transportation sector.
14. Oil, oil derivates and gas sector.
15. Supply and Import of Foodstuffs referred to in Paragraph (1) of Article (31) of the
Agreement.
The Regulations shall specify the conditions, terms and procedures required for the
Chapter Fourteen
Exemptions
Article (54)
Supply of Financial Services
The Supply of financial services shall be exempt and shall be prescribed in the Regulations,
except where payment of the Consideration for Services identified by way of an explicit fee,
commission or trade discount.
The Regulations shall specify the rules and conditions required for the application of this
Article.
Article (55)
Supply of Vacant Lands and Buildings
Supply of vacant lands and buildings by way of sale or lease shall be exempt. The
Regulations shall specify the rules and conditions required for the application of this Article.
Article (56)
Exemptions on Import
The following transactions shall be exempt from Tax:
1. Import of Goods, if the Supply of these Goods in the final destination country is
exempted from Tax or subject to Tax at Zero-Rate.
2. Import of Goods that are exempted from Customs Duty in accordance with the terms
and conditions stipulated in the Common Customs Law.
a. Diplomatic exemptions.
b. Military exemptions.
c. Imports of used personal luggage and household appliances which are brought by
citizens residing abroad and foreigners who are coming to reside in the country for
the first time.
d. Imports of returned Goods
3. Personal luggage and gifts accompanied by travellers
4. Requisites for people with special needs

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The Regulations shall specify the terms and conditions required for the application of this
Article.
Chapter Fifteen
Tax Refund and Carrying Forward the Surplus
Article (57)
Tax Refund
a) Notwithstanding the provisions of Article (65) and (69) from the Agreement, the
Authority may refund Tax paid on any Supplies or Imports issued by any of the
following:
1. A Taxable Person paying excess Tax.
2. Foreign governments, international organisations, authorities, diplomatic and
military missions for Goods and Services supplied in the Kingdom.
3. A Taxable Person in the Kingdom for Tax paid in another Implementing State for
purposes of carrying out an Economic Activity.
4. Tourists.
The Regulations shall specify the conditions, terms and procedures required for the
b) The Tax amount for which the conditions of recovery are met is refunded from the
accounts of the reserved amounts derived from Taxable Supplies and related
Administrative Penalties for the purpose of covering the request for a refund.
Article (58)
Carrying Forward the Surplus of Refundable Tax
Taxable Persons may request the Authority to carry forward any excess Recoverable Tax to
subsequent Periods.
The Authority has the right to offset the excess Recoverable Tax against the Payable Tax or
any Administrative Tax or Penalties levied on the Taxable Person imposed in accordance to
the provisions of this Law or any other Tax law, in subsequent Tax Periods until such excess
is fully utilised.
The Regulations shall specify the rules governing the application of the provisions of this
Article.

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Chapter Sixteen
Judicial Enforcement
Article (59)
Jurisdictions of Judicial Enforcement Officers
The Officers that are delegated by a Ministerial Order issued by the Minister of Justice to carry
out judicial affairs approved by the Minister, shall have the status of judicial enforcement to
implement the provisions of this Law and the implemented Orders thereof in relation to the
crimes that take place within their specialised domain and up to the capacity that is relevant
to their job roles, which includes the authority to inspect; laboratories, factories, warehouses,
shops, establishments and others that engage in activities related to the Supply or Import of
Taxable Goods or Services. The Officers have the authority to confiscate or seize such Goods
for precautionary purposes, enforce penalties, report or keep record of offenses issued during
their inspections or site visits. In the case of seeking permission to enter a residential property,
a prior search warrant should be obtained from the public prosecutor.
In cases of judicial enforcement, Officers may seek assistance from members of the public
authority, if necessary.
Chapter Seventeen
Administrative Penalties
Article (60)
Cases that will attract Administrative Penalties
a) Notwithstanding cases related to Tax Evasion stipulated in Article (63) of this Law,
administrative penalties are levied on anyone who commits any of the following acts:
1. Late filing of Tax Return or non-payment of Tax Due for the prescribed period shall
not exceed sixty days, a penalty shall be calculated at a rate not less than (5%) and up
to (25%) of the value of the Tax Due or Tax paid.
2. Failure to apply for registration within Sixty days from the date then ended stipulated
in this Law or from the date exceeding the Mandatory Registration Threshold. In this
case, a penalty up to Ten Thousand Dinars shall apply.
3. Providing false data and documentation on the Import or Supply of Goods and
Services when the value appears to be overstated in the Tax Return. In this case, a
penalty fee shall apply at a rate not less than (2.5%) and up to (5%) of the value of the
full or partial of the Tax amount due for each month the Tax is not paid.
b) Without prejudice to any excessive Penalties prescribed in any other Law, an
administrative penalty shall be imposed up to Five thousand Dinars applicable to any
person who commits any of the following acts:
1. Prevention or obstruction of the Officers deployed on behalf of the Authority or
anyone that is entrusted to implement the provisions of this Law and the orders
directed to him to perform his duties, exercise their powers to supervise, inspect,
monitor, review, request or access the documents.
2. Failure to notify the Authority of any changes in the data provided in the application
for Registration or information in the Tax Return for the prescribed Period.
3. Refraining from disclosing prices of goods or services including tax in accordance with
the provisions of Article (3) of this Law.

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4. Failure to provide the information or data required by the Authority.
5. Non-compliance with the conditions and procedures related to the issuance of a Tax
Invoice.
6. Violation of any other provision of the Law or Regulations.
c) Payment of Tax Due should be completed together with the clearance of the
Administrative Penalties prescribed in this Article.
Article (61)
The Decision to Impose Administrative Penalties
The decision to impose Administrative Penalties shall be issued by way of a Ministerial Order
or authorised representative. The Order shall disclose the Tax amount due. In the Order, the
Minister may declare the information to be publicised at the expense of the violator in a local
newspaper or in any other means of publication, depending on the type of Penalty, nature of
the violation’s severity and effects, and subject to the Order being ratified after the Minister’s
approval.
After the issuance of the Order that reflects the Administrative Penalty, the Order shall be
considered an enforceable executive bond in accordance with the provisions of the Civil and
Commercial Procedures Law promulgated by Legislative Decree No. (12) of 1971.
Article (62)
Grievance and Appeal for the Decision of Administrative Penalties
A Taxable Person may choose to appeal against the Administrative Penalties levied on him
and declared by way of a Ministerial Order. The appeal will be presented in front of the
Committee for the Examination of Grievances and Tax Litigations stipulated in Article (66)
of this Law within the prescribed dates and in accordance to the rules and procedures set to
consider the Tax objections. The Committee shall issue its judgement on the grievance case
within Thirty days following the date of filing the appeal by the Taxable Person. The case
shall be raised to the Minister or an authorised representative and a final judgment will be
issued by the Minister or an authorised representative with his recommendations,
amendments or decision to terminate the case within Fifteen days following the date the
Minister or an authorised representative received the case.
The Appellant shall be notified on the final judgment of his grievance case in the method
prescribed by the Law. Upon expiration of the Period of the grievance case, the case shall be
terminated by default without notifying the Appellant on the rejection of his case.
The Appellant can further appeal against the decision on the reject the appeal before the
competent court within Sixty days from the date of notification of refusal or from the date on
which the appeal is considered terminated.

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Chapter Eighteen
Tax Evasion
Article (63)
Cases of Tax Evasion
In accordance with the provisions of this Law, Tax Evasion shall be taken into consideration
when committing any of the following acts:
1. Failure to file the application for registration within Sixty days from the date following the
end of the period stipulated in Clause (2) of Paragraph (a) of Article (60) of this Law.
2. Failure to file the Tax Return or payment of the Tax Due on Supplies or Imports of Taxable
Goods or Services subject within sixty days following the end of the period stipulated in
Clause (1), paragraph (a) Article (60) of this Law.
3. Input Tax deduction and re-settlement of the Tax Due illegally and in violation of the
provisions of Input Tax deduction specified in this Law.
4. Recovery of Tax Input illegally and with the awareness of the Taxable Person, partially or
in full.
5. Filing forged documents, records or invoices with the intention of eliminating the
payment of the Tax Due, partially or in full.
6. Failure to issue Tax Invoices for the Supply or Import of Taxable Goods or Services carried
out in violation of the provisions of this Law.
7. Issuance of Tax Invoices inclusive of tax related to non-Taxable Supplies.
8. Failure to consistently maintain records, Tax Invoices, and accounting books relating to
the Import or Supply of Goods or Services in violation of the provisions of Article (69) of
this Law.
Article (64)
Penalties
a) When committing any of the cases of Tax Evasion stipulated in Article (63) of this Law, it
shall be punishable by imprisonment for a period not less than Three years and up to Five
years together with a Penalty not less than the same Tax amount due and up to Three
times the value. A ruling shall apply on the offender(s) that are jointly are liable to pay the
Tax amount due.
b) A repetition in committing the offence stipulated in section (a) within three years of
issuance of the judicial judgement shall be twice the penalty amount stipulated in section
(a).
c) Without prejudice to the Natural Person's criminal responsibility, the Legal Person shall
be publishable under criminal law when committed under his name, personal account or
for his benefit, the Penalty shall be twice the amount stipulated in section (a) of this Article.
d) The court shall confiscate all means of transport, devices, materials and equipment used
in the Tax Evasion felony, except for vessels and aircrafts. unless they have been
particularly prepared or leased by owners to be used for Tax Evasion purposes.
e) Court cases in relation to Tax Evasion shall be attended to in a judicial hearing at the
earliest possible. In all circumstances, Tax Evasion is a crime that is considered ill
honoured and without integrity.
f) A Criminal court case shall not be closed nor permitted to have any actions taken forward
in regard to Tax Evasion offences, with the exception pursuant to the Minister's request or
his authorised representative.
g) Without prejudice to excessive Penalties prescribed in any other law, reconciliation in Tax
Evasion cases is allowed in all or some crimes stipulated in this Article. The Minister or

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his authorised representative shall accept the reconciliation upon receiving a written
request from the defendant or his representative, either prior to filing the case or during
the court trial and before the issuance of a verdict. If the defendant pays an amount that is
equivalent to the minimum of Penalty amount prescribed for the criminal case as oppose
to the Tax amount due, the reconciliation of the settlement entails the end of the criminal
proceedings.
Chapter Nineteen
General Provisions
Article (65)
Passage of time (Aging)
Arbitration of Tax claims denying the Tax Due to the Authority shall be heard by the
Authority, in accordance according with the provisions of this law, after Five years from the
end of the Tax Period in which the Tax is due.
Tax claims requesting for reimbursement of Taxes Paid unfairly shall not be heard by the
Authority after Five years following the payment date of the Tax Due.
The Period prescribed for not hearing the cases above shall be interrupted for any purpose
related to the limitation of time provided for in the Civil Code or by Tax notification or by
notice to the Taxable Person for payment of Tax or representation of the Taxable Person in
front of the Committee for Examination of Grievances and Tax Disputes.
Article (66)
Committee for Examination of Grievances and Tax Objections
A Committee shall be formed under the name of “The Committee for Examination of
Grievances and Tax Objections” by way of a Ministerial Order issued by the Minister or an
authorised representative. The Committee shall be constituted by a President holding a
designation not less than Director with the Tax Authority together with a minimum of Five
experts in the field of Taxation, Finance, Accounting and Legal matters.
In addition to the Committees’ specialisations and competencies stipulated in Article (62) of
this Law, the Committee also specialises in the examination and revision of all Tax-related
aspects that cover Tax objections and disputes between the Taxable Person and the
Authority.
The Taxable Person shall submit his objection to the Committee within Thirty days
following the notification received on the decision or procedures of the case that may be
subject to objection after paying the prescribed penalties. The Committee shall issue a ruling
on the objection within Thirty days following the submission of the objection by the Taxable
Person. The ruling on the objection case shall then be raised to the Minister or an authorised
representative to issue a judgment for the approval, amendment, or rejection of the ruling
within Fifteen days from the date of receipt of the case.
The objector shall be notified on the ruling issued on his objection by the methods prescribed
in the Law. The expiry of the period without any notification on the ruling, the case shall be
treated as rejected or terminated by default.

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The concerned Person has the right to appeal or file for grievance in front the relevant court
against the refusal of the Minister or authorised representative to pass the case. The appeal or
grievance shall be filed within Sixty days following the date of the notification of rejecting the
objection case or following the date that his objection is treated as rejected.
The Regulations shall specify the rules and procedures of the Committee and the procedures
of its meetings.
Article (67)
Tax Representative, Tax Agent and Appointed Persons
The Authority may authorise Persons who wish to act as Tax Representatives or Tax Agents
for Taxable Persons in respect to their Tax obligations in the Kingdom, after payment of the
relevant fees to acquire the license. The Authority shall publish a list of approved Persons that
are Tax Representatives or Tax Agents.
The Tax Representative shall be jointly liable for payment of any Tax Due by the Taxable
Person until such date the Tax Representative is confirmed by the Authority as ceasing to act
on behalf of that Taxable Person.
In addition, the Taxable Person shall maintain individual responsibility for all his Tax
obligations before the Authority, even if a Tax Representative was appointed a Representative
on his behalf.
The Regulations shall specify the requisite conditions to be met by the Tax Representative or
Tax Agent authorised to execute their tasks and other obligations by the Authority.
An Appointed Person, being an administrator, personal representative, executor of a will,
receiver or liquidator of the Taxable Person shall notify the Authority in writing of his
appointment within Thirty days of the date of the appointment.
Article (68)
Confidentiality of Information
Employees of the Authority and all Persons responsible for enforcing the provisions of this Law
shall not disclose Tax information concerning Taxable Persons received or reviewed as a result
or due to their duty, at an official capacity or personal capacity outside their duty or service.
Disclosure of Tax information may be made with the exception of cases where such disclosure is
required legally for further inspection, or permission granted by the Authority, or by way of a
court order issued by the judicial authorities in the Kingdom.
(Article 69)
Retention of Records and Tax Invoices
The Taxable Person shall commit to consistently maintain records, Tax Invoices, and books of
accounts of all Supplies or Import of Goods or Services. The Taxable Person shall provide the
Authority with such records, invoices, and books upon request.
The Regulations shall specify the types of such records, books, periods and the terms and
conditions that shall be met for retention purposes.

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Article (70)
Stating the Tax Identification Number
The Taxable Person or a legal representative shall state the Tax Identification Number (TIN)
on every Tax Return, notification, Tax Invoice, Tax Credit/Debit Note, any other document
related to Tax together and any correspondence with the Authority.
The Authority shall issue the Taxable Person a Tax Registration Certificate which shall include
a information such as the Tax Identification Number and other Tax details, following payment
of the prescribed fees to extract such Certificate.
Article (71)
Electronic System of Tax Collection and Payment
The Taxable Person is responsible for the fulfilment and filing of his Tax Registration, Tax
Returns together with other applications, grievances and objections related to Tax. The
Taxable Person shall pay the net Tax Due and the any Administrative Penalties via the
Electronic System adopted by the Authority.
Article (72)
International Tax Treaties
The Provisions of this Contract shall be without prejudice to the international obligations of
the Kingdom established under agreements that are in force between the government of the
Kingdom and other foreign states, international or regional organisations, any international
or bilateral treaties or protocols where the Kingdom is a party in it.
Article (73)
Coordinating with Government Entities
The Authority shall coordinate with all the government entities in the Kingdom on the
implementation of the provisions of this Law and Regulations. All Government Entities shall
exchange data, information and other requisite documents required by the Authority for Tax
Implementation purposes.
Article (74)
License and Tax Certification Fess
Fees levied on the issuance of Tax Certificates, Licenses for Tax Representatives and Tax
Agents, and fees for filing Tax appeals shall be prescribed in accordance with a ruling issued
by the Minister followed by the approval by the Cabinet.
Chapter Twenty
Transitional Provisions
Article (75)
Date of Supply Post-Implementation of the Law
a) If an invoice is issued or Consideration is paid for Goods and Services made before the
commencement date of the Law or before the registration date in respect of a Supply
which occurs before such dates, the Supplier of the Goods or Services shall be considered
to have made a Taxable Supply on the date of actual Supply of Goods or Services. In

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such cases, the Taxable Person shall issue a Tax Invoice containing the Tax Due on the
Supply of Goods or Services before the commencement date of the Law.
b) For the purposes of this Article, the date of Supply occurs after the commencement date
in the following cases:
1. If the date when the Goods are delivered after the commencement date of the Law.
2. If the date when the performance of services is completed occurs after the
commencement date of the Law.
Article (76)
Contracts Exclusive of Tax Entered Before the Implementation of the Law
a) Tax shall be applicable on any Supplies made in respect of contracts entered before the
implementation of the provisions of this Law where the Supply is made partially or in full after
the implementation of this Law:
If the contract does not include a Tax clause (i.e. the contract does not anticipate Tax):
1. The Consideration shall be deemed inclusive of Tax when applicable under the
provisions of this Law.
2. Tax shall be calculated on the Supply, regardless of whether it was inclusive of the
Consideration for the Supply.
3. The Regulations shall specify the provisions for the application of this Article.
b) Notwithstanding paragraph (a) of this Article, Supplies that are related to contracts with the
Government that have been entered before the implementation date of this Law where the
Supply is made partially or in full after the implementation of this Law until the date the
contract is renewed or the date of expiry of the contract or falls on 31 December 2023,
whichever is earlier, shall be Taxable at Zero-Rate.
Article (77)
Timeframe for Tax Registration
a) Any Person that is Resident or carries out an Economic Activity in the Kingdom before
the implementation of this Law, shall complete the following:
1. Estimate the value of his Annual Supplies to be made in the next year which starts
from 1 January 2019
2. File for a request to apply for Tax Registration with the Authority when the value of
Supplies is expected to exceed the Mandatory Registration Threshold.
The timeframe for Tax Registration shall depend on the value of Supplies made by
the Taxable Person and prescribed by the Minister.
b) Without prejudice to the provisions of Article (63) of this Law, the registration period
prescribed in paragraph (a) of this Article shall not take into consideration the
registration procedures required to become a registered Taxable Person. A Taxable
Person shall be considered registered under the provisions of this Law when he is able to
prove his Supplies and Imports for the next year which starts from 1 January 2019 shall
exceed the Mandatory Registration Threshold.

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Article (78)
Intra-GCC Supplies
For the purpose of complying with the provisions of Article (71) of this Law, prior to the
introduction of the Electronic Services System across all GCC Member States, Intra-Supplies
of Goods involving transport from the Kingdom to another Implementing Member State
shall be treated as an Export for Tax purposes.
Article (79)
Treatment of Non-Implementing States.
For the purpose of applying the provisions of this Law, any GCC Member State shall be
treated as a non-Implementing State if, according to the Tax legislation of the other Member
State, the Kingdom is treated as a non-Implementing State that did not fully represent the
provisions of the Agreement. In this case, the State and Residents in such State shall be
considered outside the GCC Territory.

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