English text status

English translation published by the Legislation and Legal Opinion Commission. The Arabic text published in the Official Gazette remains the legal reference in the event of any discrepancy.

Practical summary

This Article treats certain private uses, changes of use, retained Goods on deregistration, gifts and free Services as Deemed Supplies where related Input Tax was deducted, subject to exceptions in the Regulations.

Who should read this?

Businesses withdrawing assets for private use, changing their use, giving gifts or samples, providing free Services or deregistering.

Why does it matter?

No Consideration does not always mean no VAT. The rule addresses a benefit for which Input Tax was deducted before it left the business or was supplied free of charge.

No ConsiderationInput Tax previously deductedGifts and samples

Current text

A Taxable Person shall be treated as making a Supply in the following cases: The use or assignment of Goods which form part of his assets, other than for the purposes of Economic Activity. Changing the use of Goods for the purpose of making non-taxable supplies. Retaining Goods he owns at the date of de-registration despite ceasing Economic Activity. Disposal of Goods without Consideration, unless for the purpose of use as samples or symbolic gifts for the purpose of his Economic Activity, in accordance with value limits set in the Regulations. Providing Services without Consideration. The provisions of Paragraph A of this Article shall apply where the Taxable Person has deducted the Input Tax relating to the Goods and Services specified. The Regulations shall specify the detailed provisions regulating Deemed Supply.

Does a Deemed Supply arise?

  1. 1

    Identify the event: private use, change of use, retention on deregistration, gift, sample or free Service.

  2. 2

    Confirm whether related Input Tax was deducted.

  3. 3

    Check the gift and sample limits in Article (8) of the Regulations.

  4. 4

    Apply the exceptions in Article (9), then determine the date and value for the VAT Return.

Connected provisions

Direct legislative link

Regulations — Article (8)

Low-value gifts and samples

It sets the BHD 50 annual per-recipient limit, the BHD 1,000 overall annual limit and sample conditions.

Open connected Article
Direct legislative link

Regulations — Article (9)

Exceptions to Deemed Supplies

It excludes cases where Input Tax was not deducted and cases where the Supply would be exempt.

Open connected Article

Official guides and tools

Official guide

VAT General Guide

Deemed Supplies, gifts and samples

Official FAQs

VAT Frequently Asked Questions

Supplies without Consideration

Illustrative example by Madar

Gifts to customers

Where a business gives free gifts and previously deducted their Input Tax, it must test the value received by each recipient during the year and the business's total annual gifts and samples. Exceeding the limits may create a Deemed Supply.

Questions to help you apply it

  • Was related Input Tax deducted?
  • Do the gift or sample conditions and limits apply?
  • What are the date and value to report for the Deemed Supply?