Bahrain Plans To Introduce Electronic Invoicing
E-invoicing initiatives in Middle Eastern countries are on the rise. More and more countries are considering the implementation of electronic models to combat tax fraud. After Egypt and Saudi Arabia, Bahrain is now starting to develop its own e-invoicing system which could be implemented as soon as 2024 (date to be confirmed).
The Kingdom of Bahrain first introduced a 5% VAT in January 2019, however recently, the Cabinet of Ministers of Bahrain approved the increase in the standard VAT rate from 5% to 10%. The measure came into effect on January 1, 2022, and is aimed at restoring the fiscal balance, which has suffered a significant impact because of COVID-19.
Currently, the National Bureau for Revenue (NBR) of Bahrain, the body responsible for implementing and controlling VAT collection, launched a public consultation to seek proposals for the introduction of an e-invoicing regime. E-invoicing will enable the NBR to ensure VAT compliance among taxpayers and improve data collection and transparency.
Although there are no confirmed details at this stage, it is very likely that the implementation will be phased in gradually and that the model to be followed will resemble that of Saudi Arabia.
The main objectives and benefits of introducing an electronic tax reporting model are:
- Assisting businesses in Bahrain by reducing their administrative burden,
- Optimize the development of the country's economic policies by collecting more detailed economic data,
- Supporting Bahrain's fiscal balance program.
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