How is VAT calculated?

The formula for VAT has two simple steps:

Initial Selling Price * VAT Percentage = VAT Amount

Initial Selling Price + VAT Amount = Final Selling Price

Where:

VAT Percentage is the percentage rate of VAT levied on a product throughout the supply chain process. The Standard Rate for VAT in Bahrain is 5%.

Initial Selling Price is the price that the seller sets for the product or service.

VAT Amount is the product of the Initial Selling Price and the VAT Percentage.

Final Selling Price is the sum of the Initial Selling Price and the VAT Amount.

There are some zero-rate and tax exempt products for which no tax is collected. You can read more about VAT rates here.