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

Previously deducted Input VAT must be adjusted for cancellation, rejection, reduced value, qualifying non-payment or changed Capital Asset use. The Capital Asset adjustment period is five years for movable tangible and intangible assets and ten years for immovable assets.

Who should read this?

Taxable Persons, finance teams and advisers applying this Article to a Bahrain VAT position.

Why does it matter?

A prior deduction may change when transactions or asset use change; track the correct annual adjustment period.

Five-year movable/intangible periodTen-year immovable periodChanged use

Current text

A Taxable Person shall be obliged to adjustthe value of the Input Tax previously deducted when importing or receiving Goods or Services supplied to him where the value of the Input Tax is higher or lower than the value of the Input Tax allowed to be deducted in the following cases: Cancellation or rejection of the Supply. Reduction in the value of the Supply following the date of Supply. Failure to pay the Consideration for the Supply in whole or in part in accordance with the conditions relating to bad debts. Change in the use of a Capital Asset. The Taxable Person shall not be obliged to amend the value of Input Tax in either of the following cases: Evidence is provided that the Goods imported by or supplied to him have been lost, damaged or stolen, in accordance with the conditions and controls determined by the Regulations. Goods imported or supplied to him are used as samples or low value gifts in accordance with Clause 4 of Paragraph A of Article 10 of this Law.

Application steps

  1. 1

    Monitor cancellations, discounts, non-payment and changes in asset use.

  2. 2

    Record the first-use deduction percentage and each later year's use.

  3. 3

    Report the adjustment in the permitted final or following first period.

  4. 4

    Retain evidence of disposal, loss, damage, theft or an exception.

Connected provisions

Direct legislative link

Regulations — Article (60)

Related Regulations Article (60)

This provision supplies the linked rule or procedure needed to apply the Article correctly.

Open connected Article

Official guides and tools

Official text

Value Added Tax Law

Article (46)

Updated official guide

VAT General Guide — Version 1.15

Capital Asset Scheme and change in use — updated 29 July 2026

Illustrative example by Madar

Machine partly moves to exempt use

If a machine was initially used for taxable activity and later partly supports exempt activity, the prior deduction is not simply cancelled. The annual change is tested within the five-year Capital Asset adjustment period.

Questions to help you apply it

  • Is the asset movable, intangible or immovable?
  • How does current use differ from the original deduction?
  • Did a disposal or loss alter the adjustment?