Low Income VAT Exemption Advances to Parliament Debate
TDT | Manama
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Parliament is set to debate one of the most financially sensitive proposals of the current legislative term. During the Nineteenth Ordinary Session of the Fourth Annual Meeting of the Sixth Legislative Chapter, MPs will take up a draft law seeking to exempt low-income Bahraini citizens from value-added tax (VAT).
Debate
The proposal, originally framed to exempt individuals earning less than BD600 per month from all forms of tax, was reviewed by the Financial and Economic Affairs Committee. Chaired by MP Ahmed Sabah Al Salloom, the committee recommended narrowing the exemption's scope to value added tax only, removing the broader reference to “taxes in all forms” and inserting the term “gross monthly income” to clarify eligibility criteria.
MP Mohamed Mohamed Al Riffaei presented the committee's report, with MP Najeeb Hamad Al Kawari serving as reserve rapporteur.
The government, however, has expressed technical reservations. In its memorandum, it argued that linking tax exemption to personal income may conflict with the structural basis of indirect taxation, particularly VAT, which is imposed on goods and services rather than directly on individuals. It also noted potential inconsistencies with unified Gulf tax agreements.
Officials further cautioned that broad exemptions could create legislative ambiguity and practical enforcement challenges, especially when distinguishing between the legal taxpayer and the final consumer.
Balance
Supporters maintain that the proposal aligns with constitutional principles requiring the protection of small incomes and safeguarding minimum living standards. As debate unfolds, MPs face a delicate balancing act between social protection and fiscal discipline.
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