MPs to vote on VAT exemption for social and youth services

TDT | Manama

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Parliament will on Tuesday vote on a proposal to amend Bahrain’s Value Added Tax (VAT) Law to extend the zero per cent rate to social-care services provided to social and cultural societies, clubs, and private bodies operating in youth and sports. The move follows a report from the Financial and Economic Affairs Committee recommending approval.

Under the proposed amendment, the zero per cent rate would apply to “the supply of social-care services and related goods and services to social and cultural societies and clubs, and to private entities working in the field of youth and sports.”

MP Hanan Fardan, one of the bill’s sponsors, said the change aligns with the principles of social justice enshrined in the Constitution. “Zero-rating these supplies supports community groups that deliver social care on a non-profit basis,” she said.

However, the Ministry of Finance and National Economy, in coordination with the National Bureau for Revenue, has urged lawmakers to reconsider. The ministry cited Bahrain’s obligations under the GCC’s Unified VAT Agreement, the potential impact on VAT revenues used to fund social protection programmes, and the principle that zero-rating should remain limited to essential needs such as education, healthcare, new housing, and key food items. It also noted that eligible VAT-registered sectors can already reclaim tax through existing refund mechanisms.

The proposal was submitted by MPs Hanan Fardan, Dr Hisham Al Ashiri, Basema Mubarak, Mohsen Al Asboul and Hisham Al Awadhi. If approved, the amendment would take effect the day after its publication in the Official Gazette.