Chetan Suri

<p>Based on M Al Ali Auditing&rsquo;s experience of assisting in implementation of Vat and in other indirect taxes globally, we can say that it takes 1-2 months in order to getting ready for Vat.</p> <h1>Key areas to focus:</h1> <ol> <li><strong><em><u>Check for the taxability of your supplies</u></em></strong>. Is it 5%, 0%, exempt or out of scope supplies?</li> <li><strong><em><u>Check for the registration requirement</u></em></strong>, if it is above mandatory then review registration timeline.</li> <li><strong><em><u>Allocate budgets</u></em></strong> for implementing vat (hiring consultant, employing new employees, software, resources or training to current employees).</li> <li><strong><em><u>Review all your business transactions</u></em></strong> for checking the impact of vat including transitional provisions in the starting phase for any continuing supply which includes both period before and after implementation of vat.</li> <li>Check the <strong><em><u>impact of Vat on pricing</u></em></strong> of your supplies. Will there be any</li> <li>Check the <strong><em><u>impact of vat on your contracts</u></em></strong> and add Vat provisions on your new contracts.</li> <li><strong><em><u>Determine the changes required</u></em></strong> in the current record keeping system. Check for the additional books/records that have to be maintained for the purpose of vat.</li> <li><strong><em><u>Check for the IT system</u></em></strong>, if there is any need to get it upgrade.</li> <li><strong><em><u>Raise awareness</u></em></strong> and discuss with your customers and suppliers for issuing and providing taxable invoices.</li> <li><strong><em><u>Examining the impact of Vat on cash flow</u></em></strong>. Ensure that your business gets the payment from customers before you need to pay vat and also reducing the timeframe between paying Vat and claiming Vat input.</li> </ol> <h1>Implementation:</h1> <h2><span style="font-size:18px">1.Registration requirement:</span></h2> <ul> <li>Mandatory: If turnover before 12 months or expected in next 12 months is BHD 37,700. (Check timeline).</li> <li>Voluntary: Can register for vat from 1<sup>st</sup> January 2019, if turnover for previous 12 months or expected in next 12 months exceeds 18,750</li> </ul> <table align="left" border="0" cellpadding="0" cellspacing="0" style="width:655px"> <thead> <tr> <th style="height:27px"> <p><strong>Annual Turnover in Sales</strong></p> </th> <th style="height:27px"> <p><strong>Must Register By</strong></p> </th> <th style="height:27px"> <p><strong>VAT Effective From</strong></p> </th> </tr> </thead> <tbody> <tr> <td style="height:23px"> <p>More than BHD 5,000,000</p> </td> <td style="height:23px"> <p>20th December, 2018</p> </td> <td style="height:23px"> <p>1st January, 2019</p> </td> </tr> <tr> <td style="height:33px"> <p>Between BHD 500,000 to BHD 5,000,000</p> </td> <td style="height:33px"> <p>20th June, 2019</p> </td> <td style="height:33px"> <p>1st July, 2019</p> </td> </tr> <tr> <td style="height:26px"> <p>Between BHD 37,500 to BHD 500,000</p> </td> <td style="height:26px"> <p>20th December, 2019</p> </td> <td style="height:26px"> <p>1st January, 2020</p> </td> </tr> </tbody> </table> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><span style="font-size:18px">2. Maintaining records<strong>:</strong></span></p> <p>Vat invoices and accounting records must be kept for not less than 5 years from the end of year in which invoice were issued. In case of real estate limit is for 15 years.</p> <h2><span style="font-size:18px">3.Return filing:</span></h2> <p>Minimum Vat period is 1 month for return filing and computation, however, every GCC country has the discretion to extend the Vat period according to local legislation and requirement. Vat return shall be filed within following the end of tax period.</p>

Bahrain-Vat Implementation & Record Keeping