Bahrain Import Tax| Learn Import Tax Applicability in Bahrain

The Bahrain Import Tax

Bahrain import tax becomes applicable when goods are entering into Bahrain from the outside world other than the Implementing State. While importing goods to Bahrain the goods are cleared through the customs in Bahrain. All goods which are cleared through the customs in Bahrain will be treated as Import of Goods for VAT purposes. When goods are being Imported in the Kingdom of Bahrain, the actual supply or sale of goods between two parties or for the consideration to be paid is not necessary to qualify as an import.

When is Bahrain Import Tax is Applicable on Import of Goods?

Applicability of Bahrain VAT law on Import of goods happens only when the import of goods are taking place in the Kingdom of Bahrain, which means when good are entering into Bahrain. As per the Bahrain VAT Law, the territory of the Kingdom of Bahrain includes its lands and the territorial waters wherever Bahrain practices its rights of sovereignty as per the international law.

When goods are being imported, the place of supply for imported goods is the first point of entry of the goods. When they enter the Kingdom of Bahrain goods are first placed under, the place of supply for the import of these goods will be the Implementing State where the goods are released from the customs. Bahrain VAT Law is applicable when goods are arriving in Bahrain and are imported at Bahrain Customs after being released from the customs.

Consider the below example for Bahrain import tax

Company XYZ in the USA delivers goods to Company ABC in Bahrain after the customs clearance. Place of supply will be Bahrain and Bahrain VAT Law is applicable here for the buyer as per the reverse charge mechanism. The VAT will be accounted at the standard rate by the buyer of the goods i.e. ABC is tax registered company in Bahrain. Company ABC will account for VAT on its normal VAT return and will be able to claim that VAT back on the same return, subject to the normal VAT recovery rule

How is Bahrain Import tax treated in the case of Goods?

When there is an import of good in Bahrain, it is mandatory to identify the correct treatment of VAT. As per the Bahrain VAT law applicability of VAT on goods are either Standard Rated or Zero Rated unless it falls under the Exempted category.

Bahrain Import Tax Standard Rate of 5%:

All goods that are imported into the Kingdom of Bahrain are subjected to a standard rate of 5% apart from the Exempted Goods. Kindly note that even if there is an exemption in customs duty for goods will also be subject to VAT in Bahrain at an applicable rate of 5%, unless they are Exempted from VAT in Bahrain.

VAT Import on Exemption Goods:

For specific cases on Imports of goods as prescribed by Bahrain VAT law, there are certain categories of goods which are exempt from VAT. They are:

• Zero Rated or VAT exempt goods (e.g., basic food items, investment precious metals, pearls and precious stones, prescribed medicines and medical equipment, etc.) which are being imported to Bahrain (You may refer to VAT General Guide for further detail of goods which are zero-rated or exempted)
• The goods that are imported for necessities and equipment for those persons with special needs. It is necessary to provide the relevant documents in accordance with the conditions mentioned in the Customs Law.
• Some of the goods exempted from customs duty while importing in Bahrain are:
• Diplomatic exemption
• Military exemption
• Returned Goods
• Import of personal belongings and household appliances by Bahrain citizens residing abroad and foreigners who are coming to reside in Bahrain for the first time
• Import of personal effects and gifts accompanied by a passenger

Who is liable for VAT while importing goods to Bahrain?

The importer on record who has been recorded for custom purposes is the one responsible to pay VAT while importing goods in Bahrain. Your goods are due for customs from the date when it is imported in Bahrain.

Customs duties are due for an importer in Bahrain:

• When a good arrives and is imported in Bahrain; or
• When a good is released from a customs duty suspension regime and imported in Bahrain

How do you pay VAT on Import of Goods?

The General rule that is applied when you are importing goods to the Kingdom of Bahrain is that, VAT is due and should be paid by the importer on record to the Bahrain Customs. Payment to the customs is processed with the same procedures for payment of customs duties and Excise Tax.

What happens when agents act on behalf of a non-VAT registered person are importing goods to Bahrain?

Those who have not registered for VAT in Bahrain but is importing goods and have an agent who is registered for VAT in Bahrain importing on behalf of them. Then, in this case, the Import Agent is liable to pay the VAT on imports before the goods are released. But the agent will not be able to recover the tax paid while filing his VAT Return. But the Import Agent will have to take the VAT directly from the unregistered person.

What happens when Import is being made by those who have registered for VAT in Bahrain?

When a taxable person who has been registered for VAT purposes in The Kingdom of Bahrain and is importing goods as an economic activity, they should use their own Commercial Registration (CR) number and their own VAT Account Number while importing the goods.

Correct VAT Number should be used by the Importers. In case the VAT number doesn’t match then the Input Tax cannot be claimed from NBR. If a clearing agent is assisting to clear the customs process, the agent should prepare and submit the documents for customs by using the CR number and the VAT Account Number of the importer.

Kindly note that if a taxable person uses a different VAT Account Number of another taxable person for importing the goods to Bahrain, in that case input tax cannot be claimed. Similarly, the VAT Account Number which has been used for that particular import will not be able to claim the Input Tax because the import is not made for his economic activity.

In case there is a deferral of import VAT for VAT registered importers in Bahrain

For taxable persons, the payment of tax due on import can be deferred during the filing of VAT return for that particular tax period when the import took place.

For such cases to defer the payment while importing goods to Bahrain the taxable person must take prior approval from NBR. Approvals can be taken by submitting a form which is available with NBR.

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