Executive summary
Bahrain’s Executive Regulations for Value Added Tax (VAT) (the Regulations) have been released in Arabic and English,1 These can be accessed via the National Bureau for Taxation website (link to original version). The Regulations contain the tax invoicing requirements, which should be implemented by businesses operating in Bahrain.
Key highlights include:
- Tax invoices must be issued in respect of all supplies of goods and services and for all rates (standard rated, zero-rated, and exempt)
- Invoices can be either issued in Arabic or English (there is no compulsory requirement to include Arabic)
- Tax invoices do not need to include the customer’s VAT registration number
- Approval is required from the National Bureau for Taxation (NBT) to issue tax invoices electronically
- Bank statements meeting certain criteria may replace full or simplified tax invoices, notably not requiring a description of goods or services to be included, or the total amount due including VAT
Detailed discussion
When is a tax invoice required to be issued?
Registered taxpayers are required to issue a tax invoice in respect of all supplies of goods and services made in Bahrain for VAT purposes. This therefore appears to include standard rated, zero-rated, and exempt supplies (this differs from the requirements in Saudi Arabia and the United Arab Emirates). It also applies to deemed supplies and supplies to nonresidents.
As per Bahrain’s VAT Law, tax invoices must be issued by the 15th day of the month following the month in which the supply took place.
What format must tax invoices be in?
It is important to note that the Regulations include a provision to state that approval must be obtained from the NBT in order to issue invoices electronically. This would suggest that until this approval has been granted, all invoices must be issued in hard copy. This includes zero-rated tax invoices issued to nonresidents, which may technically require businesses to courier tax invoices to customers where such approval has not been obtained. As noted above, tax invoices can be issued either in Arabic or English.
There are three different types of tax invoice which may be issued by taxpayers in certain situations.
Tax invoice type |
When it may be issued |
Full tax invoice |
Always, unless other formats permitted |
Simplified tax invoice |
May be issued where:
|
Bank statement |
May be issued by banks to their customers |
Tax invoice contents
The detailed content requirements for each type of tax invoice are included in the appendix of this document.
Where multiple supplies are made to the same customer within a period not exceeding one month, a summary tax invoice including (more than one supply) can be issued rather than a separate tax invoice for each individual supply.
Tax invoices must be unique (hence the requirement for the sequential invoice number) and where a copy of the tax invoice is issued, the words “duplicate of original” need to clearly be stated.
Credit and debit notes
Where a VAT amount charged in a tax invoice requires a downward or an upward adjustment, then a credit or a debit note needs to be issued respectively to correct the VAT amount in the tax invoice. The provisions state that credit or debit notes need to be issued during the tax period in which the event triggering the VAT adjustment arises, which may leave businesses with a limited time in case such event arises towards the end of the tax period.
The requirements for the credit or debit note are shown in the appendix of this document.
Record keeping
Separate to the standard requirements for record keeping, there is a specific requirement to maintain a photocopy of all tax invoices issued for a period of five years from the end of the calendar year during which the tax invoice issued (e.g., a photocopy of a tax invoice issued on 1 January 2019 must be maintain until 31 December 2025). This differs from the standard record keeping requirements which are generally from the end of the tax period.
Self-billing
A VAT registered customer may issue a tax invoice on behalf of the taxable supplier, subject to fulfilling the below conditions:
- There is a written agreement between the parties for the issuance of tax invoices by the customer
- The supplier undertakes not to issue any tax invoices in respect of the supplies made
- A mechanism is put in place to enable the supplier to approve each tax invoice issued by the customer on his behalf
- The tax invoice clearly shows that it is issued by the customer on behalf of the supplier
- The customer maintains a copy of each tax invoice he issues on behalf of the supplier
- The tax invoice meets the conditions and requirements stated in the Law and the Regulations relating to tax invoices
Currency of the invoice
Where a foreign currency is stated on the tax invoice, the amounts must be converted to Bahraini Dinars. The conversion should be based on the exchange rate approved by the Central Bank of Bahrain at the date the supply was made. The exchange rate needs to be shown on the tax invoice.
Rounding
Where the tax calculated on a supply includes fraction of Fils, the supplier may round the amount to the nearest Fils (i.e., three decimal places) in accordance with mathematical rounding.
Appendix: Tax invoice requirements
The following is our interpretation of the tax invoice requirements listed in the Regulations. We understand that where applicable, these requirements should be required on a granular level (i.e., line by line basis) rather than on an invoice level.
Invoice type |
Information required |
Full tax invoice |
The words “Tax Invoice” clearly displayed |
Supplier’s name |
|
Supplier’s address |
|
Supplier’s VAT number |
|
Customer’s name |
|
Customer’s address |
|
Date of issuance of the tax invoice |
|
Date of supply or date of payment (if these differ from the date of issuance) |
|
Sequential invoice number |
|
Description of the goods or services supplied |
|
Quantity of goods supplied |
|
Unit price, exclusive of VAT, in BHD |
|
Value of supply, before discounts, in BHD |
|
Value of discounts, if any, in BHD |
|
Value of supply, after discounts and exclusive of VAT, in BHD |
|
VAT rate applied |
|
Amount of VAT charged in BHDi |
|
Total amount due on the supply, inclusive of VAT, in BHD |
|
Prevailing exchange rate (as approved by the Central Bank of Bahrain) where a currency other than BHD is used |
|
Explicit reference that the tax is calculated based on the profit margin, in cases where the profit margin mechanism is applied for calculating the due taxii |
|
Explicit reference to the exclusion or exemption of the transaction from VATiii |
|
Simplified tax invoice |
Supplier’s name |
Supplier’s address |
|
Supplier’s VAT number |
|
Date of issuance of the simplified tax invoice |
|
Description of the goods and services supplied |
|
Total amount due on the supply, inclusive of VAT, in BHD |
|
VAT rate applied |
|
Amount of VAT charged in BHD (see endnote i) |
|
Bank statement |
Bank’s name |
Bank’s address |
|
Bank’s VAT number |
|
Customer’s name |
|
Customer’s address |
|
Date of issuance of the bank statement |
|
VAT rate applicable on each supply |
|
Amount of VAT in respect of each supply |
|
Debit/Credit note |
The words “Debit Note” or “Credit Note” clearly displayed |
Supplier’s name |
|
Supplier’s address |
|
Supplier’s VAT number |
|
Customer’s name |
|
Customer’s address |
|
Sequential number of the credit/debit note |
|
Date of issuance |
|
The number of the original tax invoice for which the VAT amount needs to be corrected |
|
The adjustment value of the supply and the VAT amount (i.e. the increment or deduction amount) in BHD |
