English text status

English translation published by the NBR in its bilingual Regulations file (marked unofficial). The Arabic text published in the Official Gazette remains the legal reference in the event of any discrepancy.

Practical summary

With NBR approval, the profit-margin scheme may cover qualifying reusable movable used Goods, art, antiques and scientific, historical or archaeological collectors' items bought from an eligible source. Margin equals selling price minus purchase price and is VAT-inclusive; no Input VAT is deducted on acquisition, the invoice states the scheme and records are retained.

Who should read this?

Used-car, second-hand Goods, art, antique and collectors' item dealers.

Why does it matter?

The scheme is not a free choice for every used item. Approval, eligible Goods and eligible acquisition source are all required; VAT is extracted from the inclusive margin, not the total selling price.

NBR approvalEligible GoodsEligible sourceVAT-inclusive marginNo purchase deduction

Current text

A. A Taxable Person may, subject to the Bureau’s approval, account for Tax based on the profit margin scheme in respect of the Supply of the following Goods: 1. Used moveable Goods, in the Kingdom, which are suitable for further use in their current state or after repair. 2. Works of art, artifacts or other items of scientific, historical or archaeological interest. B. The provisions of Paragraph A of this Article shall apply provided that the Taxable Person makes a Supply of the above mentioned Goods following their purchase from the following: 1. A Person not registered for Tax purposes in the Kingdom; or 2. A Taxable Person who is authorised to calculate Tax based on the profit margin; or 3. A Taxable Person who purchased Goods for business purposes, but was not entitled to refund Input Tax in respect of those Goods. C. The profit margin consists of the difference between the selling price and the purchase price of the Good, and is considered to be inclusive of Tax. D. The Taxable Person shall not deduct any Input Tax imposed on him or included in the value of the acquired used Goods. E. The Taxable Person shall clearly indicate on the Tax Invoices he issues that Tax has been calculated based on the profit margin. F. The Taxable Person shall keep records and documents showing details of Taxable Supplies made on the basis of the profit margin.

Before margin scheme

  1. 1

    Verify NBR approval.

  2. 2

    Classify eligible Goods.

  3. 3

    Verify acquisition source.

  4. 4

    Keep item-level purchase and sale prices.

  5. 5

    Extract VAT from inclusive margin.

  6. 6

    Do not deduct acquisition VAT.

  7. 7

    Per the NBR guide (General Guide, Section 17), not the Article text: evidence that the Goods were previously subject to VAT in Bahrain before applying the scheme.

  8. 8

    State expressly on the invoice that VAT is calculated on the margin (Article 31(e)); per the NBR guide, do not show a VAT amount; retain records.

Connected provisions

Direct legislative link

Law — Article (27)

Profit-margin scheme

The Regulation defines Goods, sources, calculation and documents.

Open connected Article
Thematic link

Regulations — Article (52)

Tax Invoice

The margin invoice needs its special statement.

Open connected Article

Official guides and tools

Official text

VAT Executive Regulations

Article (31)

Official guide

General Guide v1.16

Section 17 — updated 20 September 2026

Connected Madar tools

Madar tool

Tax Invoice Centre

Check the invoice route and issue deadline, and calculate VAT for a single transaction.

Illustrative example by Madar

Used car bought for BHD 8,000 and sold for BHD 10,000

If approval, Goods, source and prior-VAT evidence conditions are met, the BHD 2,000 margin is VAT-inclusive. At 10%, VAT is BHD 2,000 × 10÷110 = BHD 181.818 to the nearest fils, not BHD 1,000 on the full selling price.

Questions to help you apply it

  • Approval?
  • Eligible Good?
  • Source?
  • Margin?
  • No deduction?
  • Invoice statement?