VAT violation: MOICT closes garment store

A shop in the Kingdom was put under provisional seizure by the authorities here yesterday for violating VAT rules. The shop, reportedly in a shopping complex in Seef area, came under provisional seizure following a raid by the concerned authorities. According to sources, the shop is a popular garment store that has several branches in the Kingdom. Reports say the shop charged VAT but failed to display VAT registration certificate as required by law. 

The Ministry of Industry, Commerce and Tourism confirmed the legal action against the shop and stated that the store’s implementation of VAT violated rules. “In response to the Public Prosecution Office’s orders, the Ministry of Industry, Commerce and Tourism’s (MOICT) ‘Companies Control’ and ‘Consumer Protection’ Directorates imposed a provisional seizure on a vendor levying the 5% VAT without displaying a registration certificate following a complaint raised by a citizen,” MOICT said in a statement yesterday. The statement warned that levying VAT without displaying a registration certificate is a violation to Decree-Law no.

(48) of 2018 on VAT and a violation to Article 6 of Law no. (35) of 2012 that aim to enhance transparency and mitigate any unfair practices. Value Added Tax (VAT) is an indirect tax charged on selected goods and services bought and sold by businesses. The GCC countries agreed to implement VAT at a standard rate of 5 per cent. Accordingly, 5pc VAT was launched in Bahrain as of January 1st, 2019 with a few exceptions.

MOICT said that it has implemented administrative and legal mechanisms aimed at strengthening consumer protection. The statement added that the authority has intensified its efforts in monitoring the performance of all commercial establishments, and is committed to reviewing the mechanisms of applying VAT during its trial period.

Display VAT registration

MOICT said that all registered businesses in the Kingdom are required to display their VAT registration prior to levying the 5pc VAT. The rule also states that all registered businesses are legally required to display the final prices of all goods and services - inclusive of tax. Tax Invoice should include the full price, followed by the total price to be paid and the amount of tax charged.

VAT, MOICT statement said, is a joint responsibility that requires constructive strategic cooperation among three main pillars: the government, businesses, and the community. Citizens can report all VAT violations to the National Call Center on 80008001. Public Prosecution Office stated that action had to be taken against the shop as it violated key VAT rules. 

Do not overcharge

The National Bureau of Taxation (NBT) warned businesses against overcharging VAT  and consumers to ensure they do not pay in excess of 5pc for VAT.   “To ensure a smooth implementation of VAT, make sure that VAT rate does not exceed 5pc on items subject to VAT,” the National Bureau of Taxation stated.  The bureau also urged customers to be vigilant. “Make sure VAT is not applied on items not subject to VAT.” To find the list of items not subject to VAT, visit www.nbt. gov.bh