The National Bureau for Revenue (NBR) of Bahrain has invited comments through the Bahrain Tender Board to support the review and enhancement of the legal framework to launch e-invoicing in Bahrain. It can be understood that Bahrain would be following other countries that have implemented e-invoicing.
The neighbouring country, the Kingdom of Saudi Arabia (KSA) recently introduced e-invoicing and implemented phase 1 w.e.f 4th December 2021. Also, Zakat, Tax and Customs Authority (ZATCA) has notified the businesses that should implement phase 2 of e-invoicing in Saudi. You can onboard ClearTax to get ZATCA phase 2 compliant e-invoicing software in Saudi Arabia.
Let’s read all about e-invoicing in Bahrain.
e-Invoicing converts the process of issuing paper invoices and related Credit or Debit Notes (CDNs) into an electronic process. However, a paper invoice converted into an electronic format through scanning or copying is not considered an e-invoice.
The electronic process will allow the exchange and processing of invoices and related CDNs in a structured electronic format between the supplier, customer, and the tax authority. e-Invoices shall be generated using an integrated electronic solution.
Also, e-invoice issued cannot be amended, and to rectify any errors, the taxpayer has to issue a debit note or credit note.
The revenue tender document described three core objectives for introducing e-invoicing in Bahrain. They are as follows:
Also, e-invoicing increases Value Added Tax (VAT) compliance and leads to better data collection, reconciliation and transparency.
e-Invoicing in Bahrain applies to:
The applicability may vary depending nature of the business, annual turnover, number of transactions etc. Also, NBR may adopt a phased approach to make the largest businesses or certain industries comply with e-invoicing.
NBR has not announced any formal implementation timeline. However, it is expected that NBR will implement e-invoicing in Bahrain in the next 18 months.
The revenue department has not issued any specific requirements. However, the following minimum technical requirements are expected for an e-invoicing solution:
Below are a few challenges faced by businesses to implement e-invoicing in Bahrain:
Businesses in Bahrain need to undertake the following steps in advance for a smooth transition even though they await a formal announcement from National Bureau for Revenue: