Bahrain's Value Added Tax Law imposes an administrative fine of between 5% and 25% of the tax due on a person who delays filing a tax return or paying tax beyond the prescribed period, in addition to other fines set for cases such as late registration, and heavier criminal penalties in cases of tax evasion.
The Fine for Late Filing or Payment
Article (60) of the Law sets out the cases in which administrative fines are imposed, the first being late filing or payment:
Late submission of a Tax Return or late payment of Tax within the prescribed period, not exceeding sixty days. The fine in this case shall be calculated at a rate of not less than (5%) and not more than (25%) of the value of the Tax that should have been declared or paid.
The Fine for Late Registration
The same article sets a specific fine for a person who delays registering beyond the prescribed deadline:
Failure to apply for registration within sixty days from the date of expiry of the registration deadline stipulated in this Law, or from the date of reaching the Mandatory Registration Threshold. The fine in this case is calculated at an amount not exceeding ten thousand dinars.
The Fine for Incorrect Data
Where a taxable person submits incorrect data showing the value of its supplies to be higher than what was stated in its return, a further proportional fine is imposed:
Submitting incorrect data on import or supply transactions of goods and services where their value is shown to be higher than what was declared in the return. The fine in this case is calculated at a rate of not less than (2.5%) and not more than (5%) of the value of the unpaid tax, for each month or part of a month for which the tax remained unpaid.
Fines for Other Violations
Paragraph (b) of Article (60) sets a lower fine for a number of procedural violations, including obstructing Bureau employees from performing their duties:
Without prejudice to any more severe fine provided for in another law, an administrative fine not exceeding five thousand dinars shall be imposed on anyone who commits any of the following acts: 1- Preventing or obstructing Bureau employees or those responsible for implementing the provisions of this Law and its implementing decisions from performing their duties or exercising their powers of oversight, inspection, examination, review, and requesting or accessing documents.
This category also includes violations such as failing to notify the Bureau of changes to registration data, refusing to display the prices of goods inclusive of tax, and failing to comply with the conditions for issuing a tax invoice.
The Penalty for Tax Evasion
By contrast, Article (64) sets out a heavier criminal penalty for the cases of tax evasion defined in Article (63), such as failing to issue tax invoices or forging documents:
Whoever commits any of the cases of tax evasion provided for in Article (63) of this Law shall be punished by imprisonment for a period of not less than three years and not more than five years, and by a fine of not less than the amount of the tax due and not more than three times that amount, and the offender or offenders, jointly and severally, shall be ordered to pay the tax due.
In all cases, the tax due itself must be collected alongside any administrative fine imposed.
Legal References
- Legislative Decree No. (48) of 2018 Promulgating the Value Added Tax Law — Articles (60), (63) and (64)
For questions about your specific situation, you can ask the Bahrain Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.