VAT in Bahrain is a 10% tax on most goods and services, administered by the National Bureau for Revenue (NBR) under Decree-Law No. 48 of 2018. A business resident in Bahrain must register once its annual supplies pass BHD 37,500, files a VAT return every quarter if its annual supplies are BHD 3 million or less, and pays the net VAT by the last day of the month after the quarter ends. VAT started at 5% on 1 January 2019 and rose to 10% on 1 January 2022. This guide covers registration, rates, invoices, returns, records, penalties and e-invoicing for small businesses and freelancers. It is general information, not tax advice; confirm your own position with the NBR or a licensed adviser.
What is the VAT rate in Bahrain?
The standard rate is 10%. It has applied since 1 January 2022, when Law No. 33 of 2021 doubled the original 5% rate. Transitional rules kept some older contracts at 5% until 31 December 2022. They have expired, so every standard-rated supply today carries 10%.
| Country | Standard VAT rate | Mandatory registration threshold | E-invoicing for small businesses |
|---|---|---|---|
| Bahrain | 10% | BHD 37,500 | Planned; no official date |
| UAE | 5% | AED 375,000 | From 1 July 2027 for revenue under AED 50 million |
| Saudi Arabia | 15% | SAR 375,000 | Fatoora Phase 2 in waves; Wave 25 (from SAR 187,500) due 1 February 2027 |
| Oman | 5% | OMR 38,500 | Fawtara from 1 October 2027 for most SMEs |
| Qatar | No VAT in force | Not applicable | Not applicable |
| Kuwait | No VAT in force | Not applicable | Not applicable |
Qatar and Kuwait had not introduced VAT as of September 2026. For the neighbours, see our guides to UAE VAT registration and Oman VAT and Fawtara.
Which supplies are zero-rated and which are exempt in Bahrain?
Bahrain zero-rates more than its neighbours. Healthcare, education and local transport are exempt in Oman. In Bahrain they are taxed at 0%, so the supplier charges no VAT and still recovers VAT on its costs.
| Treatment | What it means | Examples from the NBR VAT General Guide |
|---|---|---|
| Standard-rated (10%) | Charge 10%, recover VAT on your costs | Most goods and services: consulting, design, IT, retail goods, restaurants, hotels, telecoms, general insurance |
| Zero-rated (0%) | Charge 0%, still recover VAT on your costs | Exports of goods and qualifying exports of services, international transport, local transport of goods and passengers, listed basic food items, listed medicines and medical equipment, qualifying healthcare services, education by licensed institutions, construction of new buildings, domestic oil and gas, investment gold, silver and platinum, pearls and precious stones |
| Exempt | Charge no VAT, cannot recover VAT on related costs | Sale, lease or licence of real estate (residential, commercial or bare land), financial services paid by margin or interest rather than an explicit fee, life insurance |
The conditions matter more than the headings:
- Basic food is zero-rated only for listed items, and not when supplied by restaurants, caterers or coffee shops.
- Education covers licensed kindergartens, schools and higher education. Professional and vocational training is generally 10%, as are uniforms, stationery and food sold by a school.
- Construction covers new buildings and extensions. Refurbishment and conversion of an existing building are 10%.
- Real estate is exempt even for commercial leases, unlike the UAE, so your office rent carries no VAT. Hotel rooms, function halls, short-term parking and separately billed service charges are not exempt.
When does a small business in Bahrain have to register for VAT?
Registration depends on your annual supplies, tested backwards and forwards.
| Registration | Threshold | Test |
|---|---|---|
| Mandatory | Annual supplies above BHD 37,500 | Exceeded in the previous 12 months, or expected in the next 12 months |
| Voluntary | Annual supplies or annual expenses above BHD 18,750 | Same two tests; optional |
| Non-resident making taxable supplies in Bahrain | No threshold | Apply within 30 days of the first supply on which VAT is due, directly or through a VAT representative |
Threshold: BHD 37,500 of annual supplies. Count standard-rated and zero-rated sales, plus services bought from abroad on which you account for VAT under the reverse charge. Leave out exempt supplies and sales of capital assets.
Deadline: Apply within 30 days starting from the last day of the month in which you exceeded BHD 37,500. If you expect to exceed it, apply within the 30 days before the first day of that month.
Example: rolling 12-month sales pass BHD 37,500 during August 2026. The 30 days run from 31 August, so apply by the end of September 2026.
Registration is online through the NBR portal at nbr.gov.bh. The NBR issues a certificate showing your VAT Account Number and your effective date of registration. You charge VAT from that date, not before it, and you must display prices inclusive of VAT.
Between BHD 18,750 and BHD 37,500 registration is your choice. It makes sense when most customers are VAT-registered businesses that recover the 10% you charge, and you pay meaningful VAT on your own costs. A voluntary registrant must stay registered for at least 24 months.
How often do you file VAT returns in Bahrain, and when are they due?
| Annual supplies | VAT period | Return and payment due |
|---|---|---|
| Above BHD 3 million | Monthly | Last day of the following month |
| BHD 3 million or less | Calendar quarters | 30 April, 31 July, 31 October, 31 January |
Deadline: The Q3 2026 return (July to September) and its payment are due by 31 October 2026, filed on the NBR portal. Payment must reach the NBR by that day.
Other rules worth knowing:
- Advisers report that businesses with annual supplies below BHD 100,000 that are not in a VAT group can opt for a simplified return and annual filing. Check the current conditions with the NBR.
- Payment is electronic: by card on the national portal bahrain.bh, or through the Fawateer service in online banking.
- With no transactions, you still file a nil return. If input VAT exceeds output VAT, request a refund or carry the credit forward.
- Found an error? Submit an amended return within 30 business days of becoming aware of it. An underpayment below BHD 5,000 can be corrected in the next return. No penalty applies within the 30 business days if the NBR has not already opened an audit.
What must a Bahraini VAT invoice contain?
Bahrain calls the document a VAT invoice. Under the NBR VAT General Guide, a full VAT invoice shows:
| Field | Notes |
|---|---|
| The label "VAT invoice" | |
| Supplier's name, address and VAT Account Number | |
| Customer's name and address | Add their VAT Account Number where registered; it is good practice |
| Sequential invoice number | One sequence, no gaps |
| Date of issue | Plus date of supply or payment, if different |
| Description and quantity | Specific enough to identify the supply |
| Unit price and value in BHD, excluding VAT | Discounts shown separately, with the net value |
| VAT rate and VAT amount in BHD | Per line where rates differ |
| Total including VAT in BHD | |
| Exchange rate | Where a foreign currency is used |
| Exempt wording | A clear statement where a supply is exempt |
Four rules to build into your process:
The 15th of the following month. A VAT invoice must be issued by the 15th day of the month after the month in which the VAT became due. Credit and debit notes follow the same deadline and must quote the original invoice number.
Simplified invoices are limited. A simplified VAT invoice, without customer details and line-level pricing, is allowed when the customer is not VAT-registered in Bahrain, or when the consideration is BHD 500 or less including VAT.
Foreign currency invoices show BHD. You can bill in USD, SAR or AED, but the amounts must be converted at the exchange rate approved by the Central Bank of Bahrain on the VAT due date. The dinar is pegged at BHD 0.376 per US dollar, so USD 2,000 of services is BHD 752.000 and the VAT is BHD 75.200.
Three decimal places. The dinar divides into 1,000 fils, and VAT is rounded to the nearest fils. A price of BHD 1,237.500 carries VAT of BHD 123.750 and a total of BHD 1,361.250. Tools that round to two decimals will drift.
Electronic invoices are allowed without prior NBR approval if they meet the content rules. In July 2026 the NBR updated the VAT General Guide with more detail on invoice requirements, including how the supply must be described, so compare your template with the current version on the NBR website.
A worked example: a quarterly VAT return in BHD
A Manama design studio is VAT-registered and files quarterly. For July to September 2026 its books show:
| Item | Net value (BHD) | VAT treatment | VAT (BHD) |
|---|---|---|---|
| Design services to Bahraini clients | 18,437.500 | Standard-rated 10% | 1,843.750 output |
| Branding project for a UK client with no GCC presence | 3,250.000 | Zero-rated export of services | 0.000 |
| Software subscription from a US vendor | 480.000 | Reverse charge 10% | 48.000 output and 48.000 input |
| Local costs: subcontractor, telecoms, equipment | 6,215.000 | Standard-rated 10% | 621.500 input |
| Office rent | 2,400.000 | Exempt | 0.000 |
| Return summary | BHD |
|---|---|
| Output VAT on sales | 1,843.750 |
| Output VAT under the reverse charge | 48.000 |
| Total output VAT | 1,891.750 |
| Input VAT on local purchases | 621.500 |
| Input VAT under the reverse charge | 48.000 |
| Total recoverable input VAT | 669.500 |
| Net VAT payable | 1,222.250 |
Check: 18,437.500 × 10% = 1,843.750. 480.000 × 10% = 48.000. 6,215.000 × 10% = 621.500. 1,843.750 + 48.000 = 1,891.750. 621.500 + 48.000 = 669.500. 1,891.750 − 669.500 = 1,222.250.
The studio files by 31 October 2026 and pays BHD 1,222.250. The net figure sits on line 17 of the NBR return form: positive means payable, negative means refundable. The reverse charge adds the same amount to both sides, so it costs nothing when all the studio's sales are taxable. The export zero rate has conditions on where the customer is resident, so check the NBR's Imports and Exports guide before applying it to GCC clients.
How long do you keep VAT records in Bahrain?
Ten years. The original rule was five years after the end of the VAT period, and starting in 2024 the NBR extended it by five more under Article 103 of the Executive Regulations. Real estate records are kept for 15 years. The UAE asks for five years, so a policy copied from a Dubai parent company is too short.
Keep accounting books, every VAT invoice and credit or debit note issued and received, customs documents, and payroll, asset and inventory records. Records can be in Arabic or English, on paper or electronic. The NBR can ask for an Arabic translation during an audit.
What are the penalties for getting Bahrain VAT wrong?
| Failure | Administrative fine (NBR VAT General Guide) |
|---|---|
| Not applying to register, up to 60 days after the registration period expires | Up to BHD 10,000 |
| Late VAT return or late VAT payment, up to 60 days late | 5% to 25% of the VAT that should have been declared or paid |
| Declaring less than the true value of supplies or imports | 2.5% to 5% of the unpaid VAT per month or part of a month |
| Breaking the invoice rules, not displaying VAT-inclusive prices, not notifying the NBR of changes | Up to BHD 5,000 |
On the worked example, a late return would cost between about BHD 61 and BHD 306 (5% and 25% of BHD 1,222.250).
Past 60 days, the law treats not registering, not filing and not paying as VAT evasion, a criminal matter, alongside not issuing VAT invoices and not keeping proper records. The penalties are imprisonment of three to five years and a fine of one to three times the VAT due, with higher maximum fines for companies. File on time even if you cannot pay in full, and talk to the NBR before day 60.
What is the status of e-invoicing in Bahrain?
As of September 2026, Bahrain has no e-invoicing mandate and no published start date. On record: the NBR surveyed taxpayers in 2022 and ran tenders, most recently in February 2025, for a national B2B e-invoicing system. Advisers expect a clearance model similar to Saudi Arabia's Fatoora, phased by turnover and starting with large taxpayers. The model, format and dates have not been published, and earlier expected dates passed without a launch, so treat any date on a vendor's website as a guess.
A VAT invoice that meets the rules above, on paper or as a PDF, remains valid. Useful preparation: clean customer records and one gap-free invoice number sequence. For how a clearance model works, see our ZATCA e-invoicing guide for small businesses.
Does Bahrain tax small business profits?
Not today. Two items explain the headlines.
Domestic Minimum Top-up Tax. Decree-Law No. 11 of 2024 introduced a 15% minimum tax for fiscal years starting on or after 1 January 2025. It covers Bahraini entities of multinational groups with global revenue of at least EUR 750 million in two of the four preceding fiscal years. It applies to large multinationals, not small businesses.
Draft corporate income tax. A draft law for a 10% corporate income tax was referred to the legislature on 29 December 2025. Advisers report it is aimed at larger companies, with thresholds reported as BHD 1 million of annual revenue and BHD 200,000 of annual profit, and 2027 as the intended start. It was still under parliamentary review in mid-2026, and no enactment had been announced as of September 2026.
From the platform: In Staks, BHD is one of the currencies you can set on an invoice, quote, credit note, bill or expense. Each document converts into your primary currency at the rate for its own date, and both figures stay on record. You create tax rates yourself in Settings, so a 10% Bahrain VAT rate can sit next to 5% UAE and 15% KSA, with VAT calculated per line and shown separately. Your tax number and your customer's print on the document. Invoices, quotes and credit notes are unlimited on every plan from Starter at $19 a month; the double-entry ledger, where the VAT on your invoices and bills posts to a tax payable account, is on Growth at $49. The limits, stated plainly: documents currently print amounts to two decimal places, so check the third decimal yourself or price in 10-fils steps. Staks does not file returns with the NBR, is not connected to any NBR system, and has no Arabic interface.
Frequently asked questions
Is VAT in Bahrain 5% or 10%?
10%. The rate was 5% from 1 January 2019 and rose to 10% on 1 January 2022.
I am a freelancer earning BHD 30,000 a year. Do I need to register?
Not compulsorily, because you are below BHD 37,500. You may register voluntarily because you are above BHD 18,750. It is worth it mainly if your clients are VAT-registered businesses and you pay VAT on your own costs.
When is the VAT return due in Bahrain?
By the last day of the month after your VAT period ends. For a quarterly filer that means 30 April, 31 July, 31 October and 31 January, with payment due the same day. Businesses with annual supplies above BHD 3 million file monthly.
Do I have to issue e-invoices in Bahrain?
No. As of September 2026 there is no mandate and no official start date. Until the NBR publishes rules, a compliant VAT invoice issued by the 15th of the following month is what the law requires.
Related reading
- Oman VAT and Fawtara e-invoicing for small businesses
- UAE VAT registration for small businesses
- VAT in Lebanon: a small business guide
- ZATCA e-invoicing for small businesses
Track your rolling 12-month supplies against BHD 37,500, issue VAT invoices by the 15th, and file by the last day of the month after each quarter. Start a 14-day free trial of Staks to invoice in BHD, AED and SAR with the tax rates you set.