Electronic invoicing in Bahrain

After VAT was introduced in January 2019, with an initial rate of 5% that increased to 10% in January 2022, Bahrain has focused its efforts on strengthening transparency and efficiency in tax collection, an essential measure to promote economic sustainability and ensure fiscal balance in the country. This increase in the tax rate reflects the government's commitment to generating additional revenue needed to fund strategic national projects and reduce dependency on oil revenues.

In 2022, Bahrain's National Bureau for Revenue (NBR), the body responsible for implementing and overseeing VAT collection, launched a public consultation to gather proposals for the introduction of an electronic invoicing regime. The consultation also highlighted the NBR's interest in exploring how electronic invoicing could not only improve tax collection efficiency but also combat tax fraud, simplify business obligations, and provide the government with more accurate data for economic planning. This project is part of a broader strategy to position Bahrain as a regional leader in technological innovation applied to tax administration.

While no official details have been confirmed, it is highly likely that the implementation will be gradual, following a phased approach that allows businesses to adapt progressively to the new requirements. This model would facilitate a smooth transition and minimize disruptions to business operations, giving companies the time needed to update their systems and train their staff.

Additionally, it is expected that Bahrain use the model implemented in Saudi Arabia as a reference point, which has been widely recognized for its well-defined structure and clearly outlined phases.

For businesses operating in Bahrain, staying informed about developments in this area and preparing to adapt to new requirements that may be established in the near future is crucial. Having the right technological solutions in place will be key to a successful transition to electronic invoicing.