Doubling of VAT to net BD288 million

REVENUES from Value Added Tax (VAT) are projected to be around BD288 million next year as the government doubles the rate from five per cent to 10pc.

This comes as the government expects to reduce the total deficit expected for 2022 from BD1.112 billion to BD823.528m.

The Shura Council’s financial and economic affairs committee has given the green signal to an amendment to the 2018 VAT Law to double the tax from January 1 next year and submitted a report to chairman Ali Al Saleh for inclusion during the chamber’s weekly session on Sunday.

This came after a meeting with Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa at the National Assembly Complex in Gudaibiya.

Committee chairman Khalid Maskati said doubling VAT was one of the options to tackle the dire financial impact of the coronavirus (Covid-19) pandemic.

“The government has just announced recovery plans in line with the Fiscal Balancing Programme which started in 2019 and was expected to end in 2022 but has now been pushed back to 2024.

“Doubling VAT at this stage is essential and a conservative estimated revenue of BD288m has been given to us.

Shaikh Salman presented the committee with track records showing that VAT revenues were BD260m in 2019, BD233m in 2020, but with no closing figure yet available for this year.

“The positives of doubling VAT outweigh the negatives and had this move been hampered, the dinar would have been devalued, limiting the ability to borrow which then would have affected the nation’s economic progress.”

The minister also denounced hoarding and price gouging.

“Traders hoarding and price gouging will be dealt with seriously. Orders signed before the 10pc VAT comes into effect will be dealt on the basis of 5pc when receipts are produced.”

On Tuesday, 23 MPs voted in favour of amending the 2018 VAT law to double the tax, 15 rejected it, one abstained and one MP was absent.

MPs also approved increasing social welfare and support allowances by 10pc from January 1, 2022.

• Under the new social welfare system to be implemented from January 1, a low-income Bahraini would receive BD77 monthly, a couple would receive BD132 up from the current BD120, and each child BD28 from BD25 with the BD150 cap removed for the total given to a family.

• The anti-inflation monthly allowance will increase by 10pc from the current BD50, BD70 and BD100 depending on family income.

Source: https://www.gdnonline.com/Details/1016382/Doubling-of-VAT-to-net-BD288-million