VAT or Value-Added Tax is a form of consumption tax that is imposed on selected goods and services at a transactional level. The GCC has agreed to apply a uniform standard rate of 5%. This standard rate will apply to almost all domestic transactions.
VAT was introduced in Bahrain on 1 January 2019, but will be implemented in phases in accordance with the timeline prescribed by the National Bureau for Revenue.
UAE and KSA have already implemented VAT on 1 January 2018, and the other GCC countries are expected to implement it within the following 12 months.
In limited instances, VAT can also apply at 0% (zero-rate) or transactions can be exempt from VAT, or out of scope.
Taxable businesses are generally able to recover the VAT they incur on their purchases and expenses.
However, as individuals, we are the final point of the supply chain and therefore, will bear the cost as we are not able to recover the VAT.