KPMG in Bahrain hosts the Kingdom’s first online Tax Summit
KPMG’s first 3 day ‘virtual’ Tax summit was launched. With over 100 Tax and Finance professionals in participation from across the Kingdom of Bahrain, the summit themed “Reimagining Tax in the Kingdom of Bahrain”, provided participants with an insight into the Present and the Future of Tax in Bahrain.
Jamal Fakhro, Managing Partner of KPMG in Bahrain, inaugurated the summit by welcoming the participants and setting the tone in relation to how we will need to collaborate within the marketplace to ensure we can overcome future challenges and risks within a domestic and international Tax framework. Mr. Fakhro also highlighted KPMG’s increased focus on Tax support by stating “At KPMG, we strive to ensure our Tax services are accessible to all businesses in Bahrain, and that we share the responsibility with the government of Bahrain as a responsible stakeholder to discuss all updates in open forums. We have built a strong Tax team in Bahrain, with two full-time partners and more than 30 professional staff including industry sector experts. The aim of the summit is to ensure that we are all up to date with the various industry tax developments and decisions issued by the Bahrain National Bureau for Revenue (NBR).” Fakhro also added a special acknowledgement to the NBR team in terms of the cooperation and support they have provided within the marketplace in his opening remark – “I would like to thank the NBR for their professionalism and the success in implementing the new tax system in Bahrain.”
The first day of the summit provided critical and practical insights and updates in relation to the key measures that were initiated by the Government of Bahrain to support businesses and individuals in Bahrain to help ease the economic impact on their businesses and livelihoods during the pandemic. The session led by Philippe Norre, Head of Tax and Corporate Services, and co-facilitated by Mubeen Khadir, Tax Partner and Ali Al Mahroos, Tax Director also provided useful and straightforward cash flow management techniques for the participants. “VAT is not only about compliance and risk management. The Tax laws and Regulations also give businesses a legal window for opportunities to optimize cash flow and the Tax relationship across the supply chain. A proper and tailored roll out of these opportunities delivers business competitiveness and process optimization in the relationships with NBR, amongst others”, Norre commented
The new ‘Economic Substance Rules (ESR)’ was another area of focus during the first day of the summit. Entities undertaking one or more of the relevant activities must meet the economic substance (ES) tests – prove that they have genuine commercial operations and management in Bahrain – and lodge the ES Return within 3 months from the financial year end. Khadir commented “Tax authorities in developed countries remain focused on the risks that arise from corporate structures that shift income or profits to entities in jurisdictions with no or low tax regimes. The implementation of ESR demonstrates Bahrain’s commitment to the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion Profit Shifting (BEPS) Action 5 on countering harmful tax practices. The key challenge now is for entities carrying out relevant activities to show they have ‘adequate’ substance in Bahrain to justify the income they generate”
The speakers also provided a deep dive into the NBR guides, tools and resources that were available for practitioners and businesses; while also providing pragmatic advice and clarifications on some of the key issues and challenges faced by businesses in the marketplace in relation to Value Added Tax (VAT). Al Mahroos stated “the release of public clarifications and guides mean that many companies may need to closely consider VAT treatments previously adopted. This is particularly likely if businesses have implemented VAT internally and have not had an external review at any stage of the implementation process. Businesses will need to understand any changes to ensure they comply with the NBR’s expectations, not simply what is written in black and white in the law.”
