NBR has released an updated VAT General Guide, which provides an overview of the Kingdom’s VAT rules and practical guidance for businesses on compliance and the tax treatment of supplies.

Bahrain’s National Bureau for Revenue (NBR) released an updated VAT General Guide on 28 January 2026. The guide outlines the main principles of value-added tax (VAT) in the Kingdom and offers practical guidance for businesses and taxpayers.

The guide provides an overview of VAT rules and procedures in Bahrain and helps users understand how supplies are treated for VAT purposes. NBR notes that the guide is for general informational purposes only and is not legally binding. Taxpayers are advised to seek professional legal advice where needed.

VAT in Bahrain is governed by several key legal texts:

  • The Unified Agreement for Value Added Tax under the GCC framework, ratified in Bahrain by Decree-Law No. 47 of 2018, which sets out general VAT principles.
  • Decree-Law No. 48 of 2018, as amended by Decree-Law No. 33 of 2021, establishing the main rules for VAT in Bahrain.
  • Resolution No. 12 of 2018, issuing the Executive Regulations under the VAT Law, providing further details on VAT implementation.

Manpower Services

Businesses may choose to outsource certain roles or functions to third-party providers or agencies. Typically, such arrangements are governed by a contract for services, under which the third-party provider performs specific activities on behalf of the business. In these cases, the services supplied by the third party are considered a VATable supply of services, and their charges are subject to VAT in accordance with the general rules.

Alternatively, a third-party provider or agency may assign specific individuals to perform roles under the direct supervision and control of the recipient business. This may occur under a contract of service between the provider and the recipient business, where the agency charges the employee’s salary or wage plus a commission.

Under the above arrangements, VAT is due on the full consideration received by the agency or third-party provider. This includes the value of the salaries, wages, and benefits of the seconded/mandated employees, as well as any commission or service fees charged by the agency or third-party provider.

For the avoidance of doubt, the application of VAT under the above arrangements should not have any impact on the salary, wages, or benefits contractually payable to the seconded or mandated employees. Such remuneration remains outside the scope of VAT at the employee level. VAT is chargeable solely on the supply of manpower services made by the agency or third-party provider to the recipient business, and is calculated on the full consideration payable under the contract, including the reimbursement of salaries, wages, and benefits, as well as any service fees or commissions.

Example

Company BAB seconds its employees to Company ZYZ under an agreement for the provision of manpower services. Under the terms of the agreement, Company ZYZ is required to pay Company BAB the value of the employees’ salaries or wages and benefits, in addition to a service charge.

VAT at the standard rate is applicable on the full consideration received by Company BAB. This includes the value of the salaries, wages, and benefits of the seconded employees, as well as the service fees charged by Company BAB in connection with the manpower services.

The updated guide is designed to assist businesses and taxpayers in complying with Bahrain’s VAT framework and understanding their obligations under the law.