Two changes are on the horizon for businesses in Bahrain: a proposed corporate income tax, and mandatory e-invoicing. Neither is final yet, and it’s easy to either panic or ignore them. 

There’s a calmer approach. The steps that prepare you for both are the same steps that make your business easier to run today. 

The proposed corporate income tax: what we know 

• Proposed: a 10% tax on company profits, targeted to start in January 2027. 

• Threshold: as announced, it would apply to companies with annual revenue above BHD 1 million or net profit above BHD 200,000 — and only to profit above BHD 200,000. 

• Status: it is a draft, not law. It was referred to the legislature in December 2025, and in May 2026 a parliamentary committee raised concerns that put it under further review. 

For most small businesses, the proposed thresholds mean no tax would be due. But being below a threshold is something you show with accurate accounts. Clean, reconciled books are how you demonstrate where you stand, whatever the final law says. 

E-invoicing: what we know 

The National Bureau for Revenue is preparing a mandatory e-invoicing system. Details and start dates haven’t been published. Regional experience, such as Saudi Arabia’s rollout, suggests a phased start, likely beginning with larger taxpayers. 

What it will almost certainly mean: invoices issued in a structured electronic format from a proper system, not typed up in Word or Excel. Businesses already invoicing from accounting software will have far less to change. 

What to do now 

1. Move to monthly bookkeeping if you’re not there yet. It’s the foundation for tax, VAT and funding. 

2. Know your real profit, not just your revenue. Monthly management reports make this routine. 

3. Invoice from accounting software. It’s the single biggest step toward e-invoicing readiness. 

4. Keep records organised and retrievable, including invoices, contracts and bank statements. 

5. Plan your year-end now. Most businesses close on 31 December. Starting in October means December is just another month. 

Software is included with our package 

Every Capital Profits monthly package includes the Odoo Accounting module at no extra cost, set up and used by our team to keep your books. If you’d rather use Tally, Sage 50, QuickBooks or Microsoft Dynamics 365 Business Central, we can supply and set up those as a separate purchase. 

That means one affordable monthly fee covers your bookkeeping, VAT and reporting, plus the software to run it — and a CPA-led team watching for what changes in 2027. 

Talk to us about your books. Call +973 17281717 or email info@cpaccounts.com. 

If your business files VAT quarterly, your return for July to September is due by 31 October 2026. That’s a Saturday this year, so in practice you want it done well before the weekend. 

Most VAT problems aren’t dramatic. They’re small gaps in the records behind the return, repeated every quarter until someone looks closely. Here’s what to check before you submit. 

1. Reconcile sales to your invoices 

The output VAT on your return should match the VAT on the invoices you actually issued. Check that every sales invoice for the quarter is recorded, that credit notes are included, and that nothing from June or October has slipped into the wrong period. 

2. Check your input VAT claims 

You can only reclaim VAT on business costs that qualify, and only when you hold a valid tax invoice. Common slips include: 

• Claiming VAT on expenses that aren’t eligible, such as some entertainment costs 

• Claiming from a receipt instead of a proper tax invoice 

• Claiming from suppliers who aren’t VAT-registered, so no VAT was actually charged 

3. Make sure your invoices meet the requirements 

The National Bureau for Revenue (NBR) updated its general VAT guidance in 2026, including more detail on what a tax invoice must show — for example, a clear description of what was supplied. If your invoices come from a Word or Excel template, compare them against the current guidance. 

4. Look at imports and unusual transactions 

Imports, capital purchases and one-off sales often need different treatment. If anything out of the ordinary happened this quarter, check it before it goes on the return. 

5. File early and keep the records 

Submit through the NBR portal ahead of the deadline, pay on time, and keep the working papers behind the return. VAT records must now be kept for 10 years, so store them where you can find them. 

Do you need to register for VAT at all? 

If you’re not registered yet, this is worth checking now. In Bahrain: 

• Registration is mandatory once your taxable supplies exceed BHD 37,500 in the last 12 months, or are expected to in the next 12 months. 

• Voluntary registration is possible from BHD 18,750. 

The test runs on a rolling 12 months, not the calendar year. A growing business can cross the line mid-year without noticing, and late registration brings its own penalties. 

If this felt like a lot 

That’s normal. VAT is one of the main reasons small businesses in Bahrain come to us. We prepare and file our clients’ returns ahead of the deadline as standard, from reconciled books, as part of one affordable monthly package that includes the Odoo Accounting module. 

See where your numbers stand. Call +973 17281717 or email info@cpaccounts.com, and we’ll tell you plainly whether you need to register, and how we’d handle your VAT every quarter.