Manama : Bahrain is only a step away from implementing its first tax system as a bill to join the unified GCC tax agreements was passed by both branches of the legislative authority yesterday.
Shura Council yesterday approved the joining of the Kingdom of Bahrain in the unified GCC agreement on selective taxation and Value Added Tax (VAT), less than a week after the House of Representatives passed it.
This came during the council’s regular weekly meeting in Gudaibiya, in the presence of representatives of the government headed by Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa. The Financial and Economic Affairs Committee had passed the bills in a meeting held last week and issued a report supporting it. Majority of council members voted for the bill. The bill stipulates imposing taxes on selected products that are harmful to health including soft drinks (50 per cent), tobacco (100 per cent) and energy drinks (100 per cent).
After the approval of the legislative authorities, the bill will be returned to the government for final approval before it could be implemented as a new law.
However, the taxes are predicted to come into effect by the first quarter of 2018, as announced by Finance Minister earlier this year.
During the session, the minister affirmed that “the government is ready to implement the taxes at the earliest” in reference to the three products mentioned in the agreement. The minister clarified that VAT would be implemented only after setting up an authority that is tasked to implement it.
The minister said last week that around BD58 million is the expected revenues from imposing the taxes on the three products in 2018.
However, the predicted income from the new tax system would be BD62 million and BD66 million in 2020 and 2022, respectively.