The NBR has issued a public clarification amending the place of supply rules for telecommunication services.
The National Bureau for Revenue (NBR) in Bahrain has amended the “use and enjoyment” rules under which the place of supply for certain telecommunications services is determined for VAT purposes. The public clarification sets out that, with effect from 1 February 2021, the place of use and enjoyment will be the place of residence of the customer, regardless of whether the customer is a business or a consumer.
The NBR has issued a public clarification on the place of supply rules for telecommunication services. As set out in the guidance from the NBR, with effect from 1 February 2021, the place of use and enjoyment of telecommunications services will be determined as follows:
Where any of the above is in or refers to Bahrain, the place of residence will be Bahrain unless the customer can provide satisfactory evidence to the supplier to confirm that his actual place of residence is in another country. However, the place of supply cannot shift from Bahrain where the country code of the SIM card is Bahrain even where the customer can provide evidence of actual residence in another country.
Where the place of residence of the customer is Bahrin, the place of supply of the services will be Bahrain. Where the services are provided by a taxable person under Bahrain VAT Law, VAT will apply.
Where a customer’s place of residence is in another country, that other country will be treated as the place of residence for the purposes of determining the place of supply of the telecommunications services.
The amended place of supply rules for telecommunication services will take effect from 1 February 2021.
Therefore, suppliers should apply the new rules where a tax due date for a supply of telecommunication services is triggered on or after 1 February 2021.
Implications for telecommunication providers
This update from the NBR will have a significant impact on the VAT treatment of supplies by both local and foreign telecommunication providers (telcos). In summary:
Telcos resident in Bahrain
Link to the NBR website
A link to the public clarification can be found below:
The latest guidance from the NBR on the place of supply rules will undoubtedly impact all suppliers of telecommunication services. Those impacted by the recent public clarification should consider any changes that may apply on the VAT treatment of their supplies from 1 February 2021.
The public clarification from the NBR has been published on its website. A link to the public clarification can be found below:
Partner, Tax Leader, Bahrain, PwC Middle East
Tel: +973 3840 0897
Mohamed Al Mahroos
Tax Director, Bahrain, PwC Middle East
Tel: +973 6674 3746