- NBR published updated versions of VAT General Guide and VAT Financial Services Guide on August 6, 2024
- Updates address treatment of interchange fees and punitive charges under Bahraini VAT
- Interchange fees are charges paid by acquirer bank to issuing bank for processing transactions
- Interchange fees related to merchants or acquirer banks in Bahrain subject to VAT at standard rate
- Income received by issuing bank from non-resident PNO may be eligible for zero-rating under specific conditions
- Punitive charges will generally be taxable starting November 1, 2024 if they represent payment for services provided
- Only payments compensating for actual damages are outside scope of Bahraini VAT
- Payments for early termination of contract will attract VAT
- Businesses and financial institutions need to review and ensure compliance with new VAT regulations
- Updates reflect Bahrain’s commitment to refining VAT system and enhancing tax compliance environment.
Source: mailchi.mp
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
