VAT Registration in Bahrain for Branch companies

VAT registration for branch companies, as per the Bahrain VAT law, branch entities should be considered as a part of the main license as far as VAT Registration in Bahrain is concerned. It means that branch licenses cannot be registered separately for VAT purposes.

For example: assume that ABC WLL registered in Bahrain has two branch licenses within Bahrain. Under VAT Registration both branches should be registered along with the main license of ABC WLL. Hence, separate TRN number will not be obtained for branches.

We have noticed there are many sole establishments in Bahrain which are having multiple branch licenses in Bahrain. There are cases where such branches are managed by different investors who are not connected with each other. Even in certain cases the activities of different branches are not related to each other.

However, as per the Bahrain VAT law, the sole owner of the entity is the responsible person to comply with the Bahrain VAT regulation. Even though those branches are managed by different business investors and legal owner of the business (Bahraini National) does not involve in the business, as per the provisions of the law, he is the responsible person to collect and pay tax to the Authority – National Bureau of Revenue.

The legal business owner, the Bahraini national generally collects an annual sponsorship fee from the investors of each branches. Such sponsorship fee may be taxable for the Bahraini National in his individual capacity provided he is supposed to register under Bahrain VAT law individually. But the business, the sole establishment will be responsible to account the entire transaction done by main license as well as all branch licenses for the tax purpose.

This branch company is a part of the head office so, the main company has to be registered. The branches should collect all the information, transaction details and compile the data and file the VAT Return along with the data of the main sole establishment entity.

Here what happens is, since every branch is doing their business independently, they may not communicate properly on time with the sole establishment owner or his representative. If the data received from the branches are incomplete or inaccurate for the purpose of filing the VAT Return, the legal owner of the sole establishment entity will be personally responsible for such non-compliances.

So in this scenario, we would like to bring to your attention that such legal business owners should make sure that the information shared by the branches are complete, accurate and comply with the provisions of the Bahrain VAT law and VAT Returns are filed periodically with the NBR  as per their return period.

VAT impact on Transactions occurring between a head-office and its branches:

Transactions that occur between a head-office and its branches are considered as outside the scope from Bahrain VAT because it is considered that the transactions are happening with the same or one legal person.

Below are the few transactions that happen between a head-office and its branches in Bahrain:

• A head office in Bahrain and its Bahrain branches are registered for VAT in Bahrain under a single Tax Registration Number and they should report all their transactions in the same VAT return on a consolidated basis.
• If there are the distribution of costs between a head-office and its branches registered in Bahrain, they will be considered as outside the scope from Bahrain VAT since the transactions are within one entity.
• In case of a foreign entity which has a representation office or branch in Bahrain and the activity is to only support its head office, such business shall be able to recover the VAT charged on their expenses to support the head-office provided the activity of the head office is taxable in Bahrain if it had done it Bahrain.
• If there is a supply of service from a supplier in Bahrain to a foreign entity with a Bahrain Branch, the foreign entity will be considered as “non-resident” in Bahrain provided the service is not closely connected with the branch.
• If a foreign entity has a branch in Bahrain supplies services to recipients in Bahrain. In this case, if the branch in Bahrain is not involved in the supply of services, the service provider will be considered as “non-resident” in Bahrain.

Please keep in mind if the VAT law is not complied well the penalty for VAT in Bahrain is huge and as a business owner, you are the only person who is responsible for complying with the law.

We, Emirates Chartered Accountants Group offers support to the businesses in Bahrain with meticulousness in compliance with the Bahrain VAT laws. Our tax officers possess professional tax approaches with practical experience of implementing VAT in various industries. They will guide and support to plan an effective VAT Compliance approach in every aspect of your business and minimize the risk of penalties and fines that would incur for non-compliance of VAT Law.

Why hire Emirates Chartered Accountants as VAT Consultants?

• Thorough knowledge with Bahrain VAT law and regulations.
• Hiring a VAT consult can definitely reduce the cost to the businesses.
• VAT Expert’s advice can be given for all the issues confronted by the clients.
• Provide solutions and recommendations changes if necessary.
• Immediate assistance as queries or clarifications raised through telephone or email will be answered through telephone or email itself.
• Stay updated with Bahrain VAT law during the course of your business operation.

Below is the video version of vat registration for branch companies in Bahrain

Our VAT Services in Bahrain are:

• VAT Registration
• VAT Training
• VAT Implementation
• VAT Return Filing 
• VAT Consultancy 
• Accounting for VAT Compliance