Shura set to vote on VAT today

A crunch vote on increasing the tax on goods and services, doubling Value Added Tax (VAT) from five per cent to 10pc, is on the Shura Council’s table today.

The upper chamber has sped up debate only four days after MPs voted in favour of the move.

It is expected the government could gain up to BD490 million through its full implementation. However, a conservative estimate of VAT revenues for 2022 remains at BD288m. This comes as the government aims to reduce the total deficit expected for 2022 from BD1.112 billion to BD823.528m.

Shura Council financial and economic affairs committee chairman Khalid Al Maskati told the GDN that the government needed to push fast with the legislation so it could be ratified and necessary procedures and instructions made before the due start date on January 1, 2022.

“The government needs time to reorganise and regulate import and trade procedures. Delaying the double VAT would have meant valuable time is lost in which vital government revenues could have been collected.

“This comes at a difficult time in which the government is in need of immediate economic recovery following Covid-19.”

The Finance and National Economy Ministry has presented the Shura Council’s financial and economic affairs committee with records showing that VAT revenues were BD260m in 2019 and BD233m in 2020. New documents presented on Thursday show VAT projections at BD272m at the end of this year.

The committee, on Wednesday, gave the green light to an amendment to the 2018 VAT Law to double the tax. This came after a meeting with Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa at the National Assembly Complex in Gudaibiya.

“Ninety-four basic commodities continue to be exempted, while government services are VAT-free,” added Mr Al Maskati. “Most of the VAT revenues come from big companies and expatriates and payments collected from Bahrainis are just 2pc of the total revenue.”

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, which will also be debated during the Shura Council’s session today.

Source: https://www.gdnonline.com/Details/1016647/-Shura-set-to-vote-on-VAT-today