Frequently Asked Questions on VAT

Last updated on 08 February, 2019


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How do I calculate the total VAT payable to the Government?

The VAT amount payable to the government can be calculated with the following formula:

VAT Amount Payable = VAT Received During Sale of Goods – VAT Paid to Incur Goods

This is illustrated in the following example:

Entities Cost in BHD VAT Amount (5% Standard Rate) Selling Price
Raw Materials Supplier to Manufacturer BHD 5,000 BHD 250 BHD 5,250
Manufacturer to Business Owner BHD 6,000 BHD 300 BHD 6,300
Business Owner to Customer BHD 7,000 BHD 350 BHD 7,350

In the example shown above, the manufacturer sells goods to the business owner for BHD 6000, and the business owner pays the VAT of BHD 300.

In the next phase of the supply chain, the business owner sells the goods to the customer for BHD 7,000, plus the VAT of BHD 350.

Here, the business owner’s VAT amount payable to the Authority is calculated using the formula mentioned above:

VAT Amount Payable = 350 - 300

here, the VAT Amount Payable = BHD 50

For the manufacturer, the VAT amount payable to the Authority is calculated using the same formula, but with different values.

VAT Amount Payable = 300 - 250

here, the VAT Amount Payable = BHD 50

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