A taxable person in Bahrain may request that the National Bureau of Revenue refund a recoverable Value Added Tax surplus, or may carry it forward to later tax periods, within five years from the date the case for a refund arose. The Bureau must decide on the refund request within sixty days, renewable for a further like period, and then pay the amount within thirty days of the date of approval.

Cases in Which a Refund May Be Requested

The Value Added Tax Law identifies categories of persons entitled to a refund of tax paid, including those set out in Article (57):

The Bureau may refund tax paid on any supply or import made by any of the following: 1- A Taxable Person who paid the amount in excess. 2- Foreign governments, international organisations, and diplomatic and military bodies and missions, in respect of goods and services supplied within the Kingdom.

The article adds two further categories: a taxable person in Bahrain, in respect of tax it paid in another implementing state for the purposes of its economic activity, and tourists.

Cases of Surplus Refund Under the Executive Regulation

Article (86) of the Executive Regulation sets out in detail the cases in which a taxable person may itself request a refund of a tax surplus:

A Taxable Person is entitled to request a refund of a tax surplus in any of the following cases: 1) Where there is a deductible net tax surplus, under the tax return in accordance with the provisions of the Law and these Regulations, and the Taxable Person may carry this surplus forward in its tax account to the following tax period.

The article adds two further cases: the taxable person having paid an amount in excess of the net tax due, and the existence of a recoverable net tax surplus upon cancellation of registration with the Bureau's approval.

Carrying the Surplus Forward Instead of a Refund

Instead of requesting an immediate refund, Article (58) of the Law allows a taxable person to carry a recoverable net tax surplus forward to later tax periods, with the Bureau entitled to set off this surplus against any tax or administrative fines due from it.

The Time Limit for Requesting a Refund

Paragraph (c) of Article (86) of the Executive Regulation sets the deadline within which a refund request must be submitted:

A Taxable Person may request the Bureau to refund tax in the cases set out in paragraph (a) of this article within five years from the end of the year in which any of those cases arose.

Deadlines for the Bureau's Decision and Payment

Once the request is submitted complete with its supporting documents, the Bureau is bound by specific deadlines for deciding on it and paying the amount, under paragraphs (d) and (e) of the same article:

The Bureau must decide on the request within sixty days, renewable for a further like period, from the date the request is completed with the required documents, and the Bureau may audit and review the Taxable Person's accounts to verify the validity of the refund request, and must notify the applicant of its decision in this regard, whether by approval or rejection.
Upon approval of the refund request, the Bureau must refund the amounts subject to the refund by bank transfer to the applicant's bank account within thirty days from the date its decision approving the refund request is issued.

Legal References

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