NAQIXBahrain VAT return: how to prepare it from your ledger
Bahrain's VAT return is filed with the National Bureau for Revenue for each tax period. Whether you file monthly or quarterly, the figures should come from the same invoices, credit notes and supplier bills that make up your ledger. Here is how to prepare the return from the books and review it before filing.
Bahrain VAT in brief
Bahrain introduced VAT in January 2019 at 5% and raised the standard rate to 10% from January 2022. The tax is administered by the National Bureau for Revenue (NBR). Registration is mandatory above a threshold based on the value of taxable supplies, and voluntary registration is possible below it. Larger businesses generally file monthly and others quarterly, with the return and payment due by the end of the month after the period ends. Returns are filed through the NBR's online portal.
Rates, thresholds, filing frequencies and the categories of zero-rated and exempt supplies are set by the law and the NBR, and change from time to time. Treat these points as background and confirm the current position with your tax adviser or the NBR.
What the return covers
The NBR's VAT return guide is the reference for each line. In broad terms, the return asks for:
| Area | What it holds |
|---|---|
| Standard-rated sales | Sales at the standard rate and the VAT charged on them |
| Zero-rated sales | Domestic sales the law zero-rates, and exports |
| Exempt sales | Sales the law exempts |
| Imports and reverse charge | Goods imported, and services bought from abroad on which you account for VAT yourself |
| Purchases | Standard-rated purchases and imports with recoverable input tax |
| Corrections | Adjustments to earlier periods, where the rules allow them in the return |
Write your mapping from the books to each line once, with your accountant, and reuse it every period. A return built the same way each time is far easier to review.
Six steps from the ledger to the return
1. Know your filing frequency and period
Confirm whether you file monthly or quarterly and the exact dates of each period. Read document dates on the company's calendar in Bahrain time, so late-evening invoices on the last day land in the right period.
2. Count only real tax documents
Issued invoices, credit notes and debit notes count. Drafts, quotations, proforma invoices and cancelled invoices do not. On the input side, count bills for goods and services received and expenses supported by a valid tax invoice.
3. Check the treatment of each sale
Standard-rated, zero-rated, exempt and out of scope sales go to different lines or nowhere. Bahrain's lists are specific, and an item zero-rated elsewhere in the GCC may be standard-rated in Bahrain. Set the treatment on the item, agreed with your adviser, rather than deciding it at month end.
4. Review imports and the reverse charge
Keep customs documents with the related bills, and list services bought from abroad without VAT so the reverse charge is accounted for. Check where import VAT appears on the return, based on how it was paid or deferred.
5. Separate recoverable from blocked input tax
Some input tax is not recoverable, such as VAT on certain entertainment or personal-use costs, and input tax related to exempt sales may be restricted. Mark blocked items at entry.
6. Reconcile to the VAT accounts
Compare output and input VAT on the draft return with the VAT account balances for the same dates, and explain every difference before you file.
Common review points
- The rate on older documents. Credit notes against invoices issued before the 2022 rate change may need the rate of the original invoice. Ask your adviser before issuing one.
- Foreign-currency sales. VAT is reported in Bahraini dinars. Check that the rate on each foreign-currency invoice is the one your books used.
- Credit notes in the right period. A credit note generally reduces the period in which it is issued.
- Customer overpayments. Credit held because a customer paid too much is not a credit note and should not reduce sales.
- Excluded documents. Review the list of documents left out of the return, and why.
How NAQIX helps prepare a Bahrain return
A new NAQIX company set up for Bahrain starts with a 10% standard rate, a zero rate and an exempt rate. Products carry a default VAT rate, each invoice carries a tax treatment (standard, zero-rated, exempt or out of scope), and counter prices can include VAT, with the VAT worked back from the price.
- The VAT report lists output VAT per invoice and rate, including debit notes, with credit notes as negative rows, and input VAT per supplier bill, with purchase returns as negative rows and expenses included when the supplier's tax number is recorded. It shows net VAT payable for any date range, monthly or quarterly, on the company's calendar dates, and can be narrowed to one branch.
- Output and input VAT sit in their own ledger accounts, and each journal opens into its document.
- Sales can be invoiced in other currencies with the rate saved on the invoice; supplier bills and expenses are recorded in the base currency.
- Bank reconciliation and a month-end close signed off by a second person keep each period fixed once it is reviewed.
NAQIX does not provide a Bahrain VAT return form, a filing connection with the NBR or an e-invoicing connector. Your accountant uses the VAT report and the sales register to complete the NBR form, and files the return in the NBR portal; NAQIX does not file it. The NAQIX page for Bahrain says the same, and the Tax & compliance and Accounting & reports pages list the features. The overview for Oman, Qatar, Kuwait and Bahrain covers the wider product.
Before you file
Share the draft return, the documents behind any unusual figure and the list of exclusions with whoever reviews it. Close the period in the books once the return is filed, keep the working papers for the period the law requires, and confirm deadlines and penalties with your tax adviser.