The National Bureau for Revenue (NBR) in Bahrain has published an updated VAT General Guide, setting out guidance on how to determine the place most closely connected with a supply. The Guide also sets out fees payable for certain NBR services and the procedures for requesting a review of an assessment (pre-appeal).
The NBR has published an updated version of the VAT General Guide with a number of changes.
The Guide contains a new Appendix C, which discusses how to determine which place of residence is most closely connected with a supply. This is relevant where an entity may have more than one place of residence for VAT purposes. The guide sets out the following factors that should be borne in mind when determining the place of residence most closely connected with a supply:
The Guide states that, when considered in the light of the above, a Bahraini establishment that has a minimal involvement in making or receiving a supply, will not be regarded as being the most closely connected with that supply.
Where the Bahraini establishment provides administrative support such as accounting, invoicing and debt collection without any other major role in a supply, this will not result in that Bahraini establishment being regarded as the one most closely connected with a supply.
The Guide incorporates the fees for certain services set out in Ministerial Decree No. 33 of 2020:
The Guide confirms the text of an FAQ on the NBR’s website dealing with requests to reconsider assessments. Rather than immediately appealing an assessment, a taxpayer may request the Reviews and Appeals Section at the NBR to review the assessment. Such a request must be made within 15 days of receiving the assessment.
The Reviews and Appeals Section will review the assessment and may accept the taxpayer’s request to cancel or amend it or may confirm the assessment. They may also seek additional information from the taxpayer to consider the request.
One advantage to this process over a formal appeal to the Tax Appeals Review Committee is that the taxpayer does not have to pay the disputed tax amount before making a request to reconsider the assessment. Further, no fees are required to be paid when requesting a review.
A link to the updated VAT General Guide can be found below:
Entities with more than one place of residence (including one in Bahrain) should review the guidance on how to establish the place most closely connected with a supply to ensure that local VAT applies where required. Businesses should also be aware of the new fees for certain NBR services and should also bear in mind that they may ask for a review of an assessment, rather than formally appealing it.
Partner, Tax Leader, Bahrain, PwC Middle East
Tel: +973 3840 0897
Mohamed Al Mahroos
Tax Director, Bahrain, PwC Middle East
Tel: +973 6674 3746