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.
A resident taxable Supplier's Service is zero-rated only when the Article's conditions are met: the Customer has no Place of Residence in Bahrain or an Implementing State and is outside Bahrain when the Services are performed; the Services relate to tangible Goods or real estate outside Implementing State territory; and performance and enjoyment occur outside that territory. In practice, the NBR reads the second condition negatively: the Services must not relate to tangible Goods or real estate located in the Implementing States, so Services unrelated to any Goods or real estate (such as consulting) can be zero-rated if the other conditions are met; Services under Law Articles 17 and 18 whose Place of Supply is Bahrain are excluded (NBR VAT General Guide, version 1.16, section 6.3.2).
Consultants, contractors, technical Service providers and businesses serving overseas Customers.
Foreign status or overseas payment is not enough. Customer presence, asset location, performance and enjoyment must all be tested. Failure of one condition prevents automatic reliance on this Article.
Current text
Test every condition
- 1
Document Customer residence.
- 2
Evidence Customer location during performance.
- 3
If the Service relates to tangible Goods or real estate, confirm they are outside the Implementing States at performance; if it relates to neither, this condition does not block the zero rate under the NBR reading.
- 4
Record where work was performed.
- 5
Record where the Service was enjoyed.
- 6
Retain contract, correspondence and work records.
- 7
Do not rely on invoice address alone.
Connected provisions
Law — Article (53)
Services to Non-ResidentsThe Law sets the category and this Article supplies the location and enjoyment tests.
Open connected ArticleLaw — Article (16)
Place of Supply of ServicesPlace of Supply and zero-rate conditions must each be examined.
Open connected ArticleOfficial guides and tools
Connected Madar tools
Foreign Customer, work in Bahrain
A foreign company with no residence in the Implementing States asks for inspection of machinery located in Bahrain, and the technician works in Bahrain. Foreign Customer status alone does not meet the Article because the asset and performance are in Bahrain.
Questions to help you apply it
- Where is the Customer resident?
- Where was the Customer during performance?
- Does the Service relate to Goods or real estate inside the Implementing States?
- Where were performance and enjoyment?