The Bahrain VAT has mentioned the records that are to be kept for VAT in Bahrain. The VAT law also describes the time duration of these records that are to be retained.
In this blog, we will let you know the Records that are to be maintained for VAT in Bahrain and how long these records are to be retained.
Which Records are to be maintained for VAT in Bahrain?
All companies that are registered for VAT in Bahrain are required to maintain the following documents for the VAT purposes under the Bahrain VAT Law:
1. All the accounting books that are related to the taxable person’s transactions.
2. Records of all supplies & imports of goods and services, including:
a. The tax invoices and alternative documents received from the suppliers
b. All tax credit notes or tax debit notes and alternative documents received from the suppliers.
c. All tax invoices and alternative documents issued by the taxable person to its customers.
d. All tax credit notes or tax debit notes and alternative documents issued by the taxable person to its customers.
3. Balance sheet and profit and loss accounts.
4. Records of Wage and salary.
5. Fixed assets (capital assets) records.
6. Stock records and statements including the quantities and values for each tax period.
7. All customs documents related to import and export.
8. Any additional records as determined by the NBR.
The National Bureau for Revenue (NBR) has also advised keeping the following records:
- Records of goods and services that have been disposed of by the taxable person or that have been used for non-business purposes.
- Records of goods and services that have been purchased in respect of which input tax is not recoverable.
- Records of any deemed supplies.
- Records of corrections of errors.
In which language records are to be maintained?
According to the NBR, the records must be maintained in English or Arabic. Thus, it is compulsory to maintain records in Arabic or English.
It should be noted that during the verification, review, audit or appeal from the NBR, they may ask the taxable person to convert some or all of the documents which are maintained in any other language to Arabic or English.
Can the documents be retained by a third party?
There is no rule or compulsion that states that the documents should be retained by the taxable person himself only. The person can appoint a third party to retain the documents that are required to be maintained under the Bahrain VAT Law for VAT in Bahrain.
However, the responsibility to retain the documents remains with the taxable person and the taxable person shall face penalties if these documents are not in compliance with the Bahrain VAT Law.
In which format the records are to be maintained?
According to the VAT Law, the documents should be retained in good condition, free from any damage.
It is not compulsory that the documents should be maintained physically, the taxable person has an option to retain the documents in an electric format also. But the option of electric format is subject to the following conditions:
- The records should be easily accessed from the computer system as and when requested by the NBR.
- The hard copies of the documentation that support these books and records can be obtained as and when required.
- The computer system has sufficient security to ensure that the documents maintained electronically cannot be tampered with or manipulated by any means.
How long should be documents retained?
According to the Bahrain VAT Law, the records should be maintained for 5 years from the end of the relevant tax period or from the end of the tax period where the adjustment period ends.
In the real estate case, the relevant records should be maintained for 15 years after the end of the relevant tax period in which they relate to.
But, the NBR has the right to notify the taxable persons to retain the records for a longer period than this period.
Are VAT accounts to be retained in your books of accounts?
The taxable person should set up VAT accounts in the books of accounts to record the actual VAT payable to the NBR or the VAT receivable from the NBR across different tax periods. It is necessary to ensure that such accounts maintained in a relevant tax period match with the VAT return filed for the respective tax period at any point in time.