English text status

Government English translation of Decree-Law No. (48) of 2018. The Arabic text published in the Official Gazette remains the legal reference in the event of any discrepancy.

Practical summary

This Article identifies transactions treated as a Supply of Goods, including a transfer of ownership or the right to dispose of Goods as owner, certain property rights, compulsory transfers for Consideration, and some transfers of business assets to another Implementing State.

Who should read this?

Businesses that sell Goods, transfer assets, enter into instalment arrangements, or make Supplies with several components.

Why does it matter?

Correctly classifying the transaction helps determine whether it is a Supply of Goods and what VAT treatment and records apply.

Transaction classificationAsset transfersComposite Supplies

Current text

A. A Supply of Goods is the transfer of ownership of Goods or the right to dispose of them as owner. This includes: 1. The transfer of possession of Goods under a contract or agreement that provides for, or permits, the transfer of ownership at a later date, no later than the date on which the Consideration is paid in full. 2. The grant of rights in rem derived from ownership that confer a right to use immovable property. 3. The compulsory transfer of ownership of Goods for Consideration, pursuant to a decision of a public authority or any law in force in the Kingdom. 4. A Taxable Person's transfer of Goods forming part of that Person's assets from the Kingdom to another place in an Implementing State, except where: (a) it is established that the transferred Goods are temporarily used in the other Implementing State under the temporary admission provisions of the Unified Customs Law; or (b) the Goods are transferred as part of another Taxable Supply in the other Implementing State. B. The Regulations shall specify the rules and procedures for applying this Article, including the provisions governing Supplies consisting of multiple components at a single price, whether Goods, Services or both.

How to classify the transaction

  1. 1

    Identify whether ownership, or the right to dispose of the Goods as owner, has passed.

  2. 2

    Review the contract where ownership transfers only after the Consideration is paid.

  3. 3

    Check the exception conditions when business assets move to another Implementing State.

  4. 4

    Where one price covers several Goods or Services, decide whether there is one composite Supply or separate Supplies.

Connected provisions

Direct legislative link

Regulations — Article (3)

Supply of Goods

It gives further examples of a Supply of Goods, including instalment contracts, water and energy.

Open connected Article
Direct legislative link

Regulations — Article (4)

Transfer of Goods to an Implementing State

It sets the exception conditions and documentary requirements for cross-border transfers between Implementing States.

Open connected Article
Direct legislative link

Regulations — Article (6)

Supplies with multiple components

It distinguishes a composite Supply from multiple separate Supplies.

Open connected Article

Official guides and tools

Official guide

VAT General Guide

Supply of Goods and Services

Official FAQs

VAT Frequently Asked Questions

Supply of Goods and Services

Illustrative example by Madar

A device sold with basic installation for one price

The presence of both a device and an installation service does not by itself determine the VAT treatment. Article (6) of the Regulations must be reviewed to decide whether this is a composite Supply or two separate Supplies.

Questions to help you apply it

  • Can the customer dispose of the Goods as owner?
  • Is there one principal element with supporting elements, or does each element have an independent purpose?
  • If the Goods moved outside Bahrain, are the exception conditions and documents in place?