An import of goods is the entry of goods in the territory of the Kingdom from a place outside that territory, where the goods are cleared through customs (i.e., not placed under a customs duty suspension regime).
The entry of goods into Bahrain from a place within the Implementing States’ (other GCC states) territory does not trigger a VAT event (i.e., an “import of goods”). Currently, Bahrain does not recognize anyone or more GCC Member States as the Implementing States. Therefore, all goods entering Bahrain that are cleared through customs will be regarded as imports of goods for VAT purposes.
Goods entering Bahrain and are customs cleared is enough for an import of goods to have taken place for VAT purposes. An import of goods does not require an actual supply (e.g., sale) between two separate parties or for consideration to be paid.
For example, ABC, a USA company, has a branch in Bahrain. It transfers goods from its USA head-office to its offices in Bahrain. Although there is no supply of goods for VAT purposes (i.e., it is a transfer of goods from the head office to the branch of the same legal person), there will be no consideration paid from Bahrain office to USA office, the arrival of the goods in Bahrain from the USA will be seen as an import of goods for VAT purposes.
Payment of VAT
VAT due on imports of goods is payable by the importer of record to Bahrain Customs Affairs at the point of import, before they are released for general circulation. Bahrain Customs Affairs will collect the VAT using the same procedures for payment of customs duties and Excise Tax.
At the time of filing of return
The payment of import VAT due by a taxable person may be deferred to the submission of its tax return for the tax period during which the import took place.
The taxable person must seek prior authorization from the NBR to defer payment of import VAT. Such request for authorization is done by way of submission of a form made available by the NBR. Further detail will be provided in due course.
The NBR may allow the deferral of payment of VAT on import if the following conditions are met:
- The importer is registered for VAT purposes in Bahrain
- The importer undertakes:
- To maintain, and submit upon request, records and documents enabling the NBR to verify the import procedures and the correctness of the calculation of the VAT due
- To cooperate and comply with any requests made by the NBR in relation to imports
- To declare the VAT due on the tax return for the tax period during which the import occurred
The NBR has full discretion as to whether to permit a taxable person to defer the payment of VAT on the import of goods.
Where the importer has received the authorization to defer the payment of import VAT, his VAT Account Number will be flagged to Bahrain Customs Affairs as authorized for VAT payment deferral and the goods will be released without import VAT being collected by Bahrain Customs Affairs.
The importer must account for the VAT due on imports in his relevant tax return. In addition, he may also be eligible to recover this VAT as input tax (subject to the normal input tax recovery rules).
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