MIXED reactions have been expressed by Bahrainis and expatriates alike as Value Added Tax (VAT) was rolled out across Bahrain yesterday.
VAT is being applied at a standard rate of five per cent on telecommunications services, clothing and apparel, hotels and restaurants, other retail goods and vehicles.
Bahrain is also applying a zero-rate on basic food items, some construction services, education and healthcare services, local transport services and the oil and gas sector.
Many people told the GDN yesterday that the tax would create a burden on their financial commitments while others brushed it off as simply a norm happening across the world.
Bahraini Abdulazim Rajab said the tax would affect large families as inflation rises and salaries remain unchanged in most sectors.
“There is a panic amongst people because of the tax even though it is not a lot,” said the 62-year-old.
“People were even lining up to buy items for Ramadan just hours before the tax was implemented – I saw people telling each other to buy everything before the tax.
“Because the salaries have not been increased, families with many children could feel like the VAT is a burden.”
The GDN previously reported that sales of cars and jewellery surged by 20pc to 40pc in the last days of December, as shoppers sought to snap up big ticket items before VAT was introduced.
Leading supermarkets, furniture stores and consumer electronics retailers also witnessed a spike in demand for TVs, home theatre systems, digital cameras and furniture in the lead up to the January 1 roll out.
Abdulla Al Shakhoori, meanwhile, said he expected less privileged Bahraini families to be the most affected by VAT.
I was (grocery) shopping and bought a lot of things for around BD50 and did not even realise there is VAT,” said the Bahraini national.
“However, families with five or more children will feel the prices have increased substantially, especially people who purchase vehicles will suffer the most.”
However, Rene Muller, a Bahraini citizen from German origins, said taxes being collected should go towards building infrastructure and further developing the country.
“We have 17pc taxes in Germany, however, we have one of the best infrastructures in the world,” said the 42-year-old.
“Bahrain now needs to use the taxes to improve its infrastructure and develop the country.”
Ukrainian national Veronika Fedartsova, who arrived in Bahrain for work only 10 days ago, said she expected the tax to have minimal effect on a household’s finances, particularly with such levies being a normal part of life abroad.
“It is part of the economic and financial system,” said the 29-year-old.
“There is a lot of economic issues in the world and taxes will help improve their country’s situation.
“However, the government should use the money for better infrastructure and other issues, otherwise people will not want to pay the taxes.
“We have experience with taxes and in Ukraine the situation is difficult because there is a war – taxes over there keep increasing several times within a year.”
Businesses have been warned of hefty penalties if they charge VAT on zero-rated goods and services starting from today.
noorz@gdn.com.bh
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