Discover answers to all your questions about VAT Refunds: FAQs

What is a VAT refund?

When the input VAT (tax paid for the goods or services purchased by the taxpayer) is greater than the output VAT (tax collected on the goods or services sold by the taxpayer) on a tax return, the taxpayer can request the NBR (National Bureau for Revenue) to refund the excess amount.

Who is eligible for a VAT refund?

The following people are eligible to receive VAT refunds:

• A taxable person who has paid excess VAT
• Non-residents
• Taxable individuals from other implementing states
• Foreign governments, international organizations, institutions, and consular and military bodies for goods and services supplied inside the Kingdom of Bahrain.
• Tourists

When will the taxpayer receive their VAT refund after submitting the request?

After receiving the refund request, NBR will review the taxpayer’s accounts to check the validity of the request. The NBR officials will then notify the taxpayer within 60 days (of reviewing the accounts) whether the refund is approved.

What are the conditions for a taxable person to obtain a VAT refund?

A taxpayer can obtain a tax refund if any of the following conditions are met:

• There is an excess deductible net tax per tax return
• The taxpayer’s VAT payment exceeds the net tax payable amount.
• There’s excess recoverable net tax when the taxpayer has applied for deregistration.

As a taxable person, can I request a refund any time I want to?

No, you must request a refund within 5 years from the end of the year in which any of these qualifying conditions have taken place:

• There is an excess deductible net tax per tax return. The excess tax can be carried forward by the taxpayer to the next tax period.
• The taxpayer’s VAT payment exceeds the net tax payable amount.
• There’s excess recoverable net tax when the taxpayer has applied for deregistration.

Will the NBR apply my refund to my VAT or penalties owed?

Yes, the NBR will offset or equalize the VAT refund against the VAT amount or administrative penalties (if any) to be paid by the taxpayer until the excess amount has been exhausted.

What is the timeline for a taxable person to obtain a VAT refund?

The NBR officials will respond to the refund request within 60 days (the request can be renewed for the same 60 days) from the date on which the taxpayer submitted the request and provided the required documents.

The officials will verify the validity of the refund request and inform the taxpayer of their approval status within 60 days from the date on which they provided the required documents.

How will the taxable person receive their VAT refund?

The tax refund will be made via a bank transfer to the taxpayer’s account within 30 days from the NBR’s approval.

Who is considered a non-resident under the VAT regime?

A non-resident individual is someone who does not have a place of business, a fixed establishment or a usual place of residence in Bahrain.

Can non-residents claim VAT refunds?

Yes, non-residents can claim VAT refunds for the tax paid in the Kingdom of Bahrain by submitting a refund request.

What are the eligibility criteria for a non-resident to submit a refund request under the VAT regime?

A refund request may be submitted by the following people:

• Taxable individuals who are residents in any of the GCC member states
• A non-resident of any GCC member state who meets the following conditions:
  • They must not have supplied goods or services that would make them liable to pay VAT in the Kingdom of Bahrain or any other GCC member state during the tax period to which the refund request relates.
  • They must be registered for VAT purposes or other business purposes in their country of residence.
  • The purpose of VAT incurred by the non-resident must be their business activity.

What is the timeline for a non-resident to obtain a VAT refund?

The NBR will validate the refund request and notify the applicant regarding their approval status within 3 months from the date of submission.

What details must be included in a refund request submitted by a non-resident?

The refund request must contain the following details:

• The name and address of the applicant
• A description of their business activities
• Registration details of the applicant (as provided to the relevant authority in their country of residence)
• The reasons why the applicant bore the costs related to the refund request
• A description of the costs related to the requested tax refund

What is the special refund scheme?

The special refund scheme allows business owners to obtain VAT refunds based on the expenses they have incurred and the goods they have imported. These refunds can be obtained irrespective of whether the business owners are taxable people or meet the conditions for input tax recovery.

Who can benefit from the special refund scheme?

The special refund scheme benefits:

• Taxable people from other GCC states
• Business visitors from non-GCC states
• Foreign governments, international organisations, institutions, consular and military bodies, and diplomatic missions
• Tourists

What are the eligibility criteria for taxable individuals from other GCC states to obtain VAT refunds?

These conditions are applicable to residents of Bahrain who are citizens of other GCC member states and have paid VAT in those GCC member states. They should meet the following conditions to obtain VAT refunds:

• These individuals should be residents in the Kingdom of Bahrain and they should NOT be registered under the VAT regime.
• The goods purchased from the other GCC state must have entered the Kingdom of Bahrain.
• The total value of the goods purchased must be greater than BHD 1000.

I am a taxable person from a member GCC state. Can I claim refunds under the Bahrain VAT regime if I’ve lost the proof of purchase of the concerned goods?

No, you cannot claim refunds on these goods. If there’s no proof of purchase from the other GCC member state, the NBR will impose tax on the goods on their entry into the Kingdom of Bahrain.

What is the procedure for foreign governments, international organisations, institutions, consular and military bodies, and diplomatic missions to claim VAT refunds?

A refund request must be submitted using a form issued by the Bureau. The NBR officials may request copies of tax invoices or related information to verify the validity of the refund request.

What is the timeline for foreign governments, international organisations, institutions, consular and military bodies, and diplomatic missions to obtain a VAT refund?

The applicant must submit the form within 30 days from the date of placing a refund request. The NBR will inform the applicant regarding their approval status within 60 days after the form is submitted.

Once the form is approved by the NBR, the tax refund will be made via a bank transfer to the applicant within 30 days from the date of approval.

Is there a minimum limit for refund requests raised by foreign governments, international organisations, institutions, consular and military bodies, and diplomatic missions?

Yes, a refund request cannot be made by these entities for an amount less than BHD 100.

Can tourists request refunds under Bahrain’s VAT regime?

Yes, tourists can request refunds for the tax paid in the Kingdom of Bahrain on goods that are transported outside the territory of the GCC.

What are the eligibility criteria for tourists to claim refunds?

To claim a VAT refund:

• The supply of goods must be made during the tourist’s stay in the Kingdom of Bahrain.
• The goods must have been purchased for personal use.
• The goods must be supplied by an authorised supplier (the NBR will issue a list of suppliers authorised to implement the refund scheme).
• The tourist must leave the Kingdom of Bahrain within 2 months from the date of supply of the goods they have purchased.

What additional documents does a tourist need to submit along with their request application?

The tourist must include the following along with their refund application:

• A tax invoice or any other proof of tax payment
• A description of the goods purchased in the Kingdom of Bahrain
• A copy of the tourist’s passport and travel ticket