Bahrain VAT and exports of services: when sales to foreign clients are zero-rated

A Manama compliance consultancy invoices a fintech in London BHD 9,400 for a regulatory review. Its first draft invoice adds 10 percent VAT. Its accountant removes it: the service is an export, zero-rated under Bahrain's VAT law, provided the file shows the client is abroad and the service was used there.

Bahrain VAT

Bahrain introduced VAT in 2019 at 5 percent and raised the standard rate to 10 percent from 1 January 2022. The National Bureau for Revenue (NBR) administers it.

Exports of services

A service can be zero-rated as an export when:

• the customer has no place of residence in Bahrain or another GCC implementing state, and
• the service is used or benefited from outside Bahrain and those states,

along with other conditions in the law and the NBR's guides. Services connected to property in Bahrain, or used in Bahrain, do not qualify.

The evidence

Keep for each foreign client:

1. The contract, naming the client and its address abroad.
2. The client's registration details.
3. The invoice, showing 0 percent VAT and the reason.
4. Evidence that the service was used outside Bahrain, such as deliverables sent abroad.

GCC clients are a separate question

Services to clients in Saudi Arabia, the UAE or Oman are not automatically exports in the same way, because GCC rules treat supplies between implementing states differently. Check each case.

Collecting payment

The Bahraini dinar is pegged to the dollar. A London client pays in pounds or dollars by international transfer, which can arrive late and short. Sterling details let a UK client pay by Faster Payments; US details let a US client pay by ACH.

Paying into Bahrain: the local rail

Source: BENEFIT: Fawri and Fawri+. Checked when this guide was last updated; the scheme's own page has the current figures.

Where Rivet fits

A Rivet business account accepts registered companies after verification, including Bahraini companies, subject to local rules. Approved companies get US account details on every plan and sterling and euro details from the Growth plan, in their own name. Payments are matched to invoices, which keeps export evidence together. Rivet is not a bank; regulated partner institutions hold the funds.