Bahrain plans to double VAT in bid to curb deficit

Bahrain plans to double VAT in bid to curb deficit

Bahrain plans to double its value-added tax to 10 per cent, the Gulf’s highest rate after Saudi Arabia, as it seeks to boost state revenue and curb one of the region’s widest budget deficits. The Gulf’s smallest economy is seeking ways to cut spending and bring its budget back into balance by 2024, a delay to the previous target, without undermining a fragile recovery, an official close to the government told . It isn’t clear when the new VAT rate will be implemented. Saudi Arabia tripled its VAT rate to 15 per cent last year to bolster state revenue while oil prices slumped. The UAE and Oman impose a 5 per cent VAT under a common 2018 framework by the six-nation Gulf Cooperation Council bloc. Kuwait and Qatar have yet to implement the tax. Bahrain is under fiscal strain despite a $10bn bailout package pledged by its wealthier neighbours in 2018. That package came under the condition that Bahrain implement fiscal reforms to rein in its budget deficit. The aim was to balance the budget by the end of 2022. That timetable had to be put on hold last year as the government focused on helping the economy weather the