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.
Specified financial Services are exempt when Consideration is implicit, but the exemption does not apply under the general rule where Consideration is expressly determined as a fee, commission or commercial discount. Certain transactions remain exempt regardless of Consideration form, including issue, allotment or transfer of debt or equity securities and life insurance or reinsurance contracts. The Article also covers qualifying investment-fund Services and parity for Islamic financial products.
Banks, finance, exchange, life-insurance, investment-fund and fintech businesses.
Product name is insufficient; Consideration must be decomposed. An embedded financing return differs from a separately stated processing fee, while some transactions remain exempt regardless of form. Islamic products follow economic equivalence.
Current text
Analyse Service and Consideration
- 1
Identify the actual financial Service.
- 2
Classify implicit return versus express fee, commission or discount.
- 3
Check always-exempt categories.
- 4
For a fund, link Service to listed activities.
- 5
Map Islamic product to conventional economic equivalent.
- 6
Separate differently treated contract elements.
- 7
Test Non-Resident zero rating separately.
Connected provisions
Law — Article (54)
Exempt SuppliesThe Law creates exemption and this Article defines Services and Consideration treatment.
Open connected ArticleLaw — Article (53)
Financial Services to Non-ResidentsQualifying overseas Financial Services may be zero-rated instead.
Open connected ArticleOfficial guides and tools
Connected Madar tools
Financing return and processing fee
Where a bank earns its return within a financing margin, that return is tested under the Financial Services exemption. A separately stated BHD 100 processing fee does not automatically follow the implicit return and must be classified separately under the Article and guide.
Questions to help you apply it
- What is the Financial Service?
- How is Consideration set?
- Is there an express fee or commission?
- Is it always exempt?
- What is the Islamic product's economic equivalent?