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GDN Exclusive: VAT plan ‘could be delayed until 2019’ says MP

Bahrain News
Fri, 10 Nov 2017
By Mohammed Al A’Ali

BAHRAIN could delay the introduction of Value Added Tax (VAT) until 2019, according to a senior MP.

GCC countries had originally targeted January 1, 2018 to implement the tax at a rate of five per cent.

However, Bahrain is already on course to miss that deadline and is now set to postpone the introduction of VAT by a year, the MP told the GDN.

He said the government was expected to wait until after next October’s national elections before submitting VAT legislation to the National Assembly.

“There have been assurances made to parliament that it (a draft VAT bill) will not arrive (in the National Assembly) during the current legislative term, which ends next May,” he said on condition of anonymity.

“Those MPs who are elected (next October) will have to deal with it.”

The MP said the anticipated passage of a new “sin tax”, approved by parliament on Tuesday despite some opposition, had eased pressure on the government to fast-track additional taxation.

He said the delay would also relieve pressure on the public, who were already facing rising costs of living.

“The selective tax on harmful products has already divided the nation and MPs,” he said.

“There have also been other moves, such as the rise in petrol, electricity and water prices, increases in numerous fees and the axing of meat subsidies.

“We can’t cope with more pressure and the government realises that.

“It is willing to be understanding and put VAT legislation on hold.”

The new “sin tax” is expected to be approved by the Shura Council in a vote on Sunday, after which it will be ratified by His Majesty King Hamad.

It will double the price of energy drinks and lead to a 50 per cent increase in the price of soft drinks.

Meanwhile, a 40 per cent Customs duty previously applied to cigarettes will be scrapped and they will instead be subject to a 100pc tax – meaning a packet that currently costs BD1.400 in the shops will cost BD2.

Both the selective tax and VAT are being introduced as part of GCC agreements that will see similar tax regimes rolled out across the Gulf.

MPs have already approved the GCC agreements, which are also expected to be approved by the Shura Council on Sunday, but must also ratify related legislation.

Meanwhile, an initial list of 83 types of products that will be subject to VAT has already been drawn up by authorities – such as electronics, vehicles and furniture.

However, food and medicines will be exempt.

“The 83 items are not an obligation to GCC member states,” the MP added.

“National legislation will state the items that should come under VAT.”

The VAT list came to light when it was mistakenly submitted to parliament on Tuesday during talks on the selective tax, before being immediately withdrawn.

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