Failure to comply with the Laws and Regulations of VAT can result in significant fines and penalties. Moreover, in cases where Tax Evasion can be proven, a Taxable Person can find himself facing imprisonment for up to five years.
This article aims to explain the fines and penalties that can be imposed on Taxable Persons in Bahrain and situations where Tax Evasion can be charged.
The VAT Law and Regulations set out the overriding position of the National Bureau for Revenue (NBR) regarding penalties. The NBR is the authority that is authorized to impose administrative fines and file criminal proceedings for Tax Evasion according to Article 113 of the Regulations. The fines and penalties are spelled out in Article 60 of the VAT Law and are summarized in the table below.
A special category within the area of penalties, fines and other legal actions are the consequences in the Legislation for Tax Evasion. Tax Evasion can be defined as the “Unlawful attempt to minimize tax liability through fraudulent techniques to circumvent or frustrate tax laws, such as deliberate understatement of taxable revenue or willful non-payment of due taxes”. The consequences of committing such an action are severe as described below:
Penalties and Punishment for Legal Persons
A legal person is subject to double the maximum fine applicable to a natural person if a tax evasion crime is committed in his name, on his behalf, or for his benefit.
Repetition of Offence
The penalty shall be doubled if the offence is repeated within three years from the date of final conviction of the first offence.
I hope this article helped explain the severity of the fines and penalties that can be faced as a result of inappropriate applications of the VAT Law and Regulations. In case you have any inquiries, please feel to contact us at Capital Profits Accounting Services on our landline (+973 17281717) or drop us an email on firstname.lastname@example.org.