Weekly Spotlight: Bahraini VAT Law Approved

This week the spotlight is on tax developments in Bahrain, where the Kingdom’s Parliament has voted to approve a Decree-Law to impose 5% VAT on goods and services in a special joint session. They will become the third GCC member to join the GCC-wide VAT agreement. It will potentially come into effect on 1 January 2019, according to a schedule laid out by the Finance Minister in February. However, the Finance and Economic Committee of Bahrain’s Parliament had reportedly recommended the law be rejected.

In addition, a Bahraini newspaper has published the list of products to be zero-rated for VAT. Customers will not be charged VAT on the goods although they will still be VAT taxable for accounting purposes. The list includes 34 types of meat and fish, including tuna, lamb, camel and chicken. It includes 37 types of fruit and vegetables, including potatoes, onions, garlic, lettuce, carrots, cucumbers, peas, zucchini, okra, parsley, apples, oranges, pomegranates and apricots. Eight types of coffee and tea are also included as well as grains, sugars, dairy products, water, oil and other foodstuffs. The Implementing Regulations for the VAT Law are expected to be published next week.

Weekly Spotlight: Bahraini Personal Data Protection Law Approved

This week the spotlight is on legal and regulatory developments in Bahrain where the King has approved the Protection of Personal Data Law. Bahrain Law No. 30/2018 sets out the responsibilities of the Personal Data Protection Authority. A Decree is to be issued to specify the administrative aspects of the Authority and establish its Board of Directors. Those found to access, disseminate, leak, or tamper with personal information will be jailed for up to one year, fined 1,000 to 20,000 Dinars, or both. Those receiving a bribe in relation to falsified information will be fined 3,000 to 20,000 Dinars.

The Authority’s Board of Directors will issue the necessary decisions to implement the law within six months of its publication in the Official Gazette. The law will come into effect one month following its publication in the Official Gazette.

Bahrain: Australian Court Rejects ‘Permanent Home’ Tax Appeal

Australia’s Federal Court rejected an appeal on 8 June 2018 against an issued but undisclosed tax assessment from the Australian Taxation Office for the 2011 income year.

The case revolved around whether or not an apartment in Bahrain was a permanent home for tax purposes on 8 June 2018 under the ‘domicile’ test.

The case involved a former aircraft engineer, Glenn Harding who lived in Bahrain for more than five years in the same block of fully-furnished apartments. He had appealed on the basis he was not a ‘resident’ in the 2011 income year, but the Federal Court rejected that partly because of the type of accommodation he lived in.

The ruling means renting out a fully-furnished apartment overseas may not be enough to convince the tax office an individual is a non-resident for tax purposes.

Weekly Spotlight: Bahraini Bankruptcy Law Adopted

This week the spotlight is on legal and regulatory developments in Bahrain, where the Shoura Council has approved the bankruptcy law. A member of the Council’s Financial Committee, Darwish Almanaie said the aim of the legislation is to remedy some of the shortcomings of the existing bankruptcy law. Another Committee member, Sadeq Rahma said the law has been approved because it includes new provisions which are in line with updated laws and regulations and the requirements of commercial businesses. The law is expected to update bankruptcy procedures and establish a law for financial restructuring for enterprises and companies who will be subject to it. The law also regulates cross-border restructuring and bankruptcy procedures.

Elsewhere, the Public Utilities and Environment Committee of Bahrain’s Shoura Council has approved a draft law which would establish a public food safety body. The Food Authority would have its own legal personality and have administrative and financial independence. The Food Control Section of the Health Ministry is currently responsible for the safety of food produced or imported in to the country. The Health, Industry, Trade and Tourism, Works, Municipal Affairs and Urban Planning Ministries as well as the Bahrain Chamber of Commerce and Industry all approved the draft law.