Bahrain Mirror (Exclusive): Complementing the austerity policy and the lifting of subsidies on basic goods and services, the government has approved the value added tax (VAT) in a Gulf agreement to add more burdens on the shoulders of Bahrainis, who have been suffering from the government's failures.

Bahrain signed the unified VAT agreement and the GCC Selective (Excise) Tax Treaty in February. The agreement is supposed to enter into force in early 2018.

According to the agreement, Bahrain will impose a 5% tax on 90 commodities. Finance Minister Ahmed bin Mohammed Al Khalifa said basic food commodities, medicines and medical supplies would be excluded from the tax.

On November 7, the Parliament approved the selective tax, despite the refusal of the Finance Committee. The bill stipulates that a tax will be imposed on some selected commodities. Tobacco products, for instance, will be taxed at 100%, soft drinks at 50% and energy drinks at 100% as well.

The government also imposed more fees on citizens to cover the budget deficit. On March 26, a decision for raising the fees for departures via Bahrain Airport was put into effect.

The decision stipulates that the extra fee for departure via flights is set at 7 BD and at 1 BD for "transit" travelers in exchange for using airport facilities.

In the Khalifa bin Salman Port, an official source said that IBM Terminals will start raising the number of service charges it offers at the port as of May 2017.

The source said that the company obtained the approval of the Ministry of Transportation and Communications to raise fees of port operations.

The Ministry of Works and Municipal Affairs imposed cost-recovery fees, which require payment of 12 dinars per square meter in the net area to be built in square meters for any property, whether residential, commercial or investment-related.

The decision divided the charges into 3 sections: 4 dinars for roads, 4 dinars for electricity and 4 for commercial services, pointing out that a house consists of 250 meters of land and the total size of the construction amounting to 300 square meters: 300 x 12 dinars equals 3,600 dinars, which is the value of fees to be collected.

Despite the postponement of the decision to raise fees on commercial records, for a period of 6 months, the Minister of Industry, Trade and Tourism confirmed that the decision "is in effect and irreversible."

The decision was set to enter into force in August 2017, but the government postponed its implementation until April 2018.

According to the new amendments, fees for starting business activities range from 25 to 1,000 BD.

In the postal sector, information was revealed stating that the government intends to turn the postal sector in the Ministry of Transportation and Communications into a profitable government authority [...] and a bill in this regard will be referred to the Parliament.

An MP even confirmed supporting the government's approach, saying that MPs will support this move, since many postal services are subject to subsidies.

In the same context, the Labor Market Regulatory Authority (LMRA) imposed a new fee on the processing of applications submitted to it, amounting 5 BD and including 5 categories of transactions.

The decision, which came into effect on August 31, includes registration of companies, issuance of renewals or revocation of work permits, recording the absence of a worker, increasing the number of work permits and issuing residence permits for foreign workers and members of their families.

The government rejected a proposal to reduce electricity and water bills for divorcees and widows, stressing that the economic situation in Bahrain was "delicate". It added that the Electricity Authority relies on running its own revenues, in addition to government support, and is in severe need to increase its revenues to improve performance and raise efficiency.

In the field of health services, the head of the Supreme Council of Health Mohammed bin Abdullah Al Khalifa said on (November 19) that Bahrain is heading towards imposing further fees on medicine and consultations.

He pointed out in an interview published by the Bahrain News Agency (BNA) that there are "three types of fees that will be imposed on patients when applying health insurance in early 2019."

He further clarified that "there will be no fees on primary health services (health centers), but if there is a medicine is dispensed from the pharmacy, there will be a fee of several dinars (determined after consultation with the legislative authority) imposed on the full prescription, which will be paid to the pharmacy for its services to dispense the medicines."

"It is proposed to establish a nominal fee on specialist doctor consultations in hospitals after referral by the family doctor in health centers, and a nominal fee will be set for entering the hospital," he added.

Arabic Version