VAT in Bahrain: the 10% rate, what's exempt, and a VAT calculator
Updated
What is the VAT rate in Bahrain?
Bahrain's standard VAT rate is 10% — since 1 January 2022; it started at 5% on 1 January 2019. Buying, selling or renting a home and the interest on your loans carry no VAT, while a car, bank fees, general insurance and a property agent's fee carry 10%. Petrol and diesel and building a new home are zero-rated.
Official rule: The standard VAT rate is 10% of the value of a supply or import, from 1 January 2022 (Law No. 33 of 2021 replacing Article 3 of the VAT Law); it was 5% before. (source, checked 2026-10-21)
- Price without VAT
- BHD 1,000.000
- Price with VAT
- BHD 1,100.000
BHD 1,000 + 10% VAT = BHD 1,100.000. A price of BHD 1,000 that already includes VAT holds BHD 90.909 of VAT (BHD 909.091 without it).
Not a valid document. Estimate for information only — not financial advice, not an offer of credit and not a bank document. Errors are possible. Only your bank's or finance company's official offer letter, contract and statements are binding.
The rate, and what is exempt or zero-rated
Prices shown to buyers in Bahrain must include VAT (a price without VAT may be shown only for exports, and then it must say so). The legal basis of the 10% rate is Law No. 33 of 2021; the full list of rules and sources is in the box at the bottom.
| What you pay for | VAT |
|---|---|
| Buying or selling a home, commercial property or land | Exempt |
| Renting a home (also furnished, if no separate furniture fee) | Exempt |
| Hotels, serviced accommodation, paid parking up to a month | 10% |
| Property agent's or broker's fee | 10% |
| Building a new home (construction and installed materials) | 0% (zero-rated) |
| Work on an existing building, architects, loose furniture | 10% |
| Interest on loans and cards; interest on deposits | Exempt |
| Bank fees and commissions (e.g. processing, early settlement, remittances) | 10% |
| General insurance (life insurance exempt) | 10% |
| Buying a car; renting a car without a driver | 10% |
| Petrol, diesel, motor oil | 0% (zero-rated) |
| Importing a car (5% duty, then VAT on value + duty) | about 15.5% of the customs value (Bahrain Customs rounds it to 15%) |
| Used household goods of people moving to Bahrain for the first time | Exempt |
VAT on buying or renting a home
- Buying, selling or renting property in Bahrain is exempt from VAT — homes, commercial property and land alike.
- Renting a home is VAT-exempt; hotels and serviced accommodation carry 10% (a lease of a year or more never counts as serviced accommodation).
- A furnished or semi-furnished home let counts as rent of real estate as a whole (VAT-exempt), provided the landlord charges no separate fee for the furniture.
- Not part of the VAT-free property sale or rent, so 10% applies: hotel stays, paid parking of up to one month, shared (non-exclusive) office space, event halls, and management, utilities, telecom, internet or TV charged separately on top of the rent; a property agent's or broker's fee also carries 10%.
On a home purchase the VAT you meet is on the services around it, such as the agent's fee and your bank's fees — see property purchase costs and rent or buy?.
Building a new home: zero-rated
Building a new home (or other new building) is zero-rated: construction services and the materials the builder installs carry 0% VAT; work on an existing building, demolition, architects' and interior-design fees and loose furniture carry 10%.
VAT on loans and bank fees
- Interest on loans is VAT-exempt — credit cards, personal loans, mortgages and car loans alike; so is interest earned on bank deposits.
- Bank fees carry 10% VAT — arrangement and processing fees and other bank charges such as early-termination (early-settlement) and late-payment fees; the interest (or Islamic profit) itself is VAT-exempt.
Example: a processing fee of BHD 100 (CBB's cap on a consumer loan) costs BHD 110.000 with VAT; the interest itself carries none. Every loan calculator here adds the VAT on the fee: personal loan, home loan, early settlement.
VAT on cars, fuel and car insurance
- Buying a vehicle carries 10% VAT, and so does renting a car without a driver.
- Petrol and diesel for vehicles are zero-rated (0% VAT), and so is motor oil.
- General insurance carries 10% VAT; life insurance and reinsurance are exempt.
- Importing a car: see the next section — about 15.5% of the customs value in duty and VAT.
The car loan calculator adds the official registration fees and the VAT on the bank's fees.
VAT on imports and moving to Bahrain
- Importing goods: 5% customs duty, then 10% VAT on the customs value plus the duty — about 15.5% of the customs value (Bahrain Customs rounds it to 15%).
- Importing your own used personal belongings and household appliances is VAT-exempt for Bahraini citizens returning from abroad and for foreigners coming to live in Bahrain for the first time (under the customs rules).
Does a business have to register for VAT?
- A business or individual resident in Bahrain must register for VAT when its taxable supplies over 12 months exceed BHD 37,500.
- Voluntary VAT registration is possible above BHD 18,750 of taxable supplies or expenses a year.
Registration is for businesses and individuals engaged in an economic activity in Bahrain. Filing, returns and refunds are handled by the National Bureau for Revenue (NBR) — this page does not cover them.
Questions people ask
When did VAT start in Bahrain?
In Bahrain, on 1 January 2019, at 5%. The standard rate rose to 10% on 1 January 2022 (Law No. 33 of 2021).
Is there VAT on rent in Bahrain?
No — in Bahrain, renting a home is exempt, furnished too unless the furniture is charged separately. Hotels, serviced accommodation and separately billed services such as utilities or internet carry VAT.
Is there VAT on buying property in Bahrain?
No — in Bahrain, the sale of homes, commercial property and land is exempt. A property agent's or broker's fee carries 10%.
Is there VAT on loan interest or bank fees?
In Bahrain, interest is exempt — on personal loans, home loans, car loans and cards. Fees and commissions carry 10%, for example a processing or early-settlement fee.
Is there VAT on buying a car in Bahrain?
Yes, 10%. An imported car pays 5% customs duty and then 10% VAT on the customs value plus the duty — about 15.5% of the customs value (Bahrain Customs rounds it to 15%).
Is there VAT on petrol in Bahrain?
In Bahrain, no VAT is charged: petrol, diesel and motor oil are zero-rated.
Who must register for VAT in Bahrain?
A business or individual in Bahrain whose taxable supplies over 12 months exceed BHD 37,500; registration is voluntary above BHD 18,750.
Are prices in Bahrain shown with VAT?
Yes — prices shown to buyers in Bahrain must include VAT.