MPs Seek VAT Relief for Suppliers Waiting on Government Invoices

A group of five MPs has put forward a draft change to Bahrain’s VAT law that would tie the tax due date on government work to the day suppliers are paid.

The proposal amends Article 13 of the Value Added Tax Law issued under Decree-Law No. 48 of 2018 by adding a new clause. It says that when goods or services are supplied to a government entity, the “date of supply” is the date the supplier receives the amount due.

Those behind the proposal are MP Hassan Ebrahim, MP Dr Ali Al Nuaimi, First Deputy Speaker Abdulnabi Salman, MP Hamad Al Doy and Mamdouh Al Saleh.

They argue the change is aimed at a cashflow problem suppliers and service providers face when dealing with government entities. In their explanatory memorandum, they say invoices are often settled after long and uneven waits, ranging from three months to six months and, in some cases, more than a year.

Under the current rules, a supplier may have to account for VAT before receiving payment, which the proposers say places an added burden on working cash and can make it harder to meet tax payments on time.

The proposal cites constitutional provisions on social justice in taxation and the right of members of either chamber to propose laws. It also points to the role of the legislature in reviewing laws and amending them when practice shows a need for change.

If the amendment is enacted, it would take effect the day after publication in the Official Gazette, with implementation assigned to the Prime Minister and ministers within their areas of responsibility.