Bahrain's Excise Tax Law imposes three rates on three categories of excise goods: 100% on tobacco, 50% on carbonated (soft) drinks, and 100% on energy drinks.

The Statutory Text of the Rates

Article (3) of Law No. (40) of 2017 on Excise Tax fixes these rates expressly:

Excise Tax is levied on the following excise goods, according to the tax rates assigned beside each of them: 1-Tobacco (100%) 2-Soft Drinks (50%) 3-Energy Drinks (100%)

This Law implements the GCC Unified Agreement for Excise Tax, ratified by Law No. (39) of 2017, which left it to the Ministerial Committee to determine the list of goods harmful to human health and the environment and luxury goods subject to the tax and their rates, with each domestic law then applying these rates within its own jurisdiction.

When Excise Tax Becomes Due

Excise tax becomes due when excise goods are released for consumption, whether produced domestically in the Kingdom or imported, in accordance with the mechanism and procedures set by the Executive Regulation. Tax may be suspended on goods held in a licensed tax warehouse or moved between tax warehouses.

Tax Return and Tax Period

A registrant must submit an excise tax return for a tax period determined by the Executive Regulation. Article (14) of the Law provides:

The registrant must submit a tax return to the Ministry for the tax period determined by the Regulations, provided it is not less than one month and not more than one year.

Excise Tax Exemptions

Certain bodies and cases are exempt from excise tax subject to specific conditions, and Article (16) sets out the most notable of these:

Excise goods shall be exempt from tax - subject to reciprocal treatment - for diplomatic and consular bodies, international organisations, and the heads and members of accredited diplomatic and consular missions in the Kingdom, in accordance with the conditions and procedures set by the Regulations.

Excise goods accompanying travellers arriving in the Kingdom are also exempt, provided they are not of a commercial nature and meet the conditions of the Unified Customs Law.

Refund of Excise Tax

Article (17) allows a refund of excise tax paid on excise goods in certain cases, including export or re-export:

A refund of tax paid on excise goods shall be permitted in the following cases: 1- Excise goods released for consumption in the Kingdom, in the case of export or re-export for business purposes outside the territory of the Council states. 2- Excise goods used in the production of other excise goods subject to tax.

Administrative Fines for Excise Tax Violations

Except in cases of tax evasion, Article (20) of the Excise Tax Law imposes proportional administrative fines for failing to comply with filing a tax return and paying the tax, stating:

Except for cases of tax evasion provided for in Article (26) of this Law, administrative fines shall be imposed on anyone who: 1) violates the provisions of paragraph (a) of Article (14) of this Law, at a rate of not less than (5%) and not more than (25%) of the value of the tax that should have been declared.

The same paragraph also imposes a fine of 5% of the value of unpaid tax for each month or part thereof for failing to pay the tax due within the period set by the Executive Regulation.

Legal References

For questions about your specific situation, you can ask the Bahrain Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.