.jpg?20260307')
A proposal to exempt low-income Bahrainis from paying Value Added Tax (VAT) will be debated in Parliament, despite the government calling for a rethink due to its technical and economic implications.
The draft legislation, prepared by the government based on a proposal from MPs, seeks to exempt Bahraini citizens earning less than BD600 per month from VAT, in an effort to ease cost-of-living pressures.
Originally framed as an exemption from ‘all types of taxes’, the bill was amended by the financial and economic affairs committee to limit the scope strictly to VAT, following concerns that a blanket tax exemption would be legally flawed and contradict existing tax structures.
Financial and economic affairs committee chairman Ahmed Al Salloom said the amendments strike a balance between social objectives and legal reality.
“We listened carefully to the government’s observations and to technical advice,” he said. “We therefore agreed to narrow the proposal to Value Added Tax only, because this is the tax that directly affects daily consumer spending and household costs.”
He stressed that the bill is rooted in Parliament’s commitment to improving living standards.
“Raising the standard of living for citizens, while preserving their gains, is a top priority in the Government Programme and in Parliament’s work,” Mr Al Salloom said. “Exempting low-income Bahrainis from VAT is one practical way to ensure that basic necessities remain affordable.”
Under the amended draft, a low-income person is defined as any Bahraini national whose total monthly income is less than BD600. The Finance and National Economy Minister would be tasked with issuing the regulations needed to implement the law.
Parliament legislative and legal affairs committee has confirmed that the draft law is constitutionally sound, while the financial and economic affairs committee unanimously recommended approval.
However, the government has cautioned against the proposal, arguing that tax legislation must be precise and that VAT, as an indirect tax, is legally imposed on merchants rather than end consumers. It also pointed out that many essential goods and services – including healthcare, education and basic food items – are already zero-rated or exempted under the VAT Law.
Mr Al Salloom acknowledged these points, but said Parliament’s role is to respond to public concerns.
“We recognise that essential items are already zero-rated, but citizens still feel the cumulative impact of VAT on many aspects of daily life,” he said.
He added that the committee is open to further refinement during the legislative process.
“This is an initial step,” Mr Al Salloom said. “If the law is approved, mechanisms can be developed to ensure fair and workable implementation without undermining fiscal stability.”
The government has also warned that the bill could conflict with GCC unified VAT and selective tax agreements, which base exemptions on goods and services rather than income level. It further argued that income tax is not imposed on citizens in Bahrain, meaning the original objective of exempting personal income is already achieved.
Despite these reservations, MPs backing the proposal believe it addresses a real social need.
“This debate is about protecting the most vulnerable segment of society,” Mr Al Salloom said. “Economic reforms must go hand in hand with social protection.”
mohammed@gdnmedia.bh
&uuid=(email))