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Tally's Guide on Important Terms Aims to Provide Clarity on Value Added Tax.

The Kingdom of Bahrain implemented value-added tax (VAT) from 1st January 2019. Since its implementation, the government has been undertaking several initiatives to help citizens get acquainted with the rules and policies related to compliance. In an endeavour to support the government's initiatives, Tally Solutions, a leading international accounting and compliance software provider has published an insightful guide on key terms and definitions related to VAT.

"To ensure that VAT compliance is clear and transparent, small and medium businesses (SMBs) in Bahrain should have adequate knowledge about the key terminologies related to the subject. The guide on key terms is an attempt to raise awareness, as well as ensure that the potential terms are understood and where possible, addressed," said Mr. Vikas Panchal, Business Head- Middle East, Tally Solution.

While Tally's guide on VAT terminologies helps in understanding the Vat fundamentals, the guide is a comprehensive collection of terms used on a regular basis by all stakeholders of VAT. Below is a quick list of the terminologies addressed by Tally.

Goods - all types of physical assets that can be supplied, including real estate, water, and all forms of energy. Examples include cars, apparel, electronics, etc.

Services - anything that can be supplied other than goods. Example: Legal services, professional services, car repair, etc.

Supplier - a person who supplies (sells) goods or services

Recipient - a person who receives (purchases) goods or services from a supplier

Consideration - everything collected or to be collected by a supplier from the recipient or a third party for supply of goods or services. Example: Ahmed Electronics supplies 100 mobile phones @ BHD 100 each to Niyaz Electronics. VAT @ 5 percent (BHD 500) is charged on the supply. Here, the consideration to be collected by Ahmed Electronics is BHD 10,500 including VAT

Taxable person - a person, being a natural or legal person, who carries out an economic activity that requires them to register under VAT. Only a taxable person can charge VAT

Registrant - a taxable person who has been issued a VAT registration number

Export - supply of goods or services from Bahrain to another country

Import - supply of goods or services from another country to Bahrain

Capital assets - material and immaterial assets of a business allocated for long-term use. Example: Buildings, machinery

Input tax - tax paid by a taxable person on goods or services purchased. Example: Ahmed Enterprises purchases goods for BHD 200 from Ziya Enterprises. VAT @ 5 percent (BHD 10) is charged. Here, Ahmed Enterprises' input tax is BHD 10

Output tax - tax charged by a taxable person on supply of goods or services. Example: Ahmed Enterprises supplies goods @ BHD 300 to Niyaz Enterprises. VAT @ 5% (BHD 15) is charged on the supply. Here, Ahmed Enterprises' output tax is BHD 15

Input tax deduction - a mechanism by which a VAT registered person can deduct input tax from the output tax for a period and only remit the balance tax payable to the National Bureau for Revenue. Example: In the above example, Ahmed Enterprises' output VAT on supply to Niyaz

Enterprises is BHD 15 and input VAT on purchase from Ziya Enterprises is BHD 10. Ahmed Enterprises can claim input tax deduction of BHD 10 and only remit the balance output tax (BHD 5) to the National Bureau for Revenue

Taxable supplies - supplies on which VAT is charged and input tax deduction can be availed

Exempted supplies - supplies on which no VAT is charged, and no input tax deduction can be availed

Tax invoice - a written or electronic document where the occurrence of a taxable supply is recorded

Tax credit note - a written or electronic document where the occurrence of any amendment to a taxable supply, that reduces or cancels the same is recorded

Tax period - a period for which the tax payable needs to be calculated. Tax periods are monthly and quarterly from 2020 onwards. For the first year 2019, transitional tax period is applicable basis the date of registration

Tax return -- a statement to be prepared and submitted by a taxable person for a tax period. It contains the details of sales, purchases, output tax, input tax, tax payable, etc.

"Tally has always been committed to serving the business community with its value-added services. The guide is an effort to help the Kingdom and its businesses get acquainted with VAT's terminologies, which is key for understanding fundamentals of VAT and be compliant," added Panchal.

Over the past one year, Tally has been helping more than 50,000 businesses comply with VAT regulations in the UAE and KSA. It is accredited by Federal Tax Authority (FTA) in UAE and General Authority of Zakat and Tax (GAZT) in UAE and Saudi Arabia. The company with its various accreditations aims at helping clients to achieve tax compliance, stock management and compliance in a timely and effective manner. Trusted by more than 1.5 million businesses globally, Tally Solutions includes a list of 50,000 satisfied clients across GCC.

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Geographic Code:7BAHR
Date:Feb 26, 2019
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