English text status

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.

Practical summary

Real-estate exemption does not cover hotel accommodation, paid parking for under one month, non-exclusive serviced offices, function rooms, or separately charged management, utilities, telecoms, internet and TV. Removable furniture and equipment are not real estate. A furnished residential lease is treated wholly as real estate where furniture is not separately charged.

Who should read this?

Landlords, tenants, hotels, serviced offices, parking and venue operators and property managers.

Why does it matter?

An 'lease' label does not decide exemption. Exclusive use, parking duration and separate pricing of Services and furniture must be analysed.

Hotel-like Services not exempt rentSeparately charged items tested separatelyUnsplit furnished residence treated as real estate

Current text

A. The following - for the purposes of ( applying the provisions of Article 55 of the Law - shall not be considered as the sale or lease of real estate: 1. The provision of hotel accommodation, 2. The provision of paid car parking for periods of less than one month; 3. The lease of serviced office space where the Customer does not have the right to use a designated space on an exclusive basis; 4. Rental of a function room, hall or similar facility; 5. Management Services, utilities, Telecommunications, internet and television charged for separately and in addition to the rent. B. Furniture, fittings, plant and apparatus which are not attached to land or a building and which can be removed.( without damaging the property shall not be treated as real estate for the purpose of Article 55 of the Law. C. If residential real estate is rented furnished or semi-furnished, the entire consideration for the rental shall be treated as a Supply of real estate where no separate charge is made for the use or rental of the furniture, fixtures and fittings.

Analyse the property contract

  1. 1

    Identify actual sale or lease.

  2. 2

    Exclude hotels and function rooms.

  3. 3

    Test parking period.

  4. 4

    Test exclusive designated space.

  5. 5

    Separate additionally charged Services.

  6. 6

    Test removability without damage.

  7. 7

    Check separate furniture charge.

Connected provisions

Direct legislative link

Law — Article (55)

Sale and rent of real estate

The Law creates exemption and this Article defines boundaries.

Open connected Article

Official guides and tools

Official text

VAT Executive Regulations

Article (82)

Official guide

VAT General Guide — Version 1.15

Exemptions and refunds

Official guide

VAT Real Estate Guide

Sale and rental

Connected Madar tools

Connected Madar tools

Tax Invoice Centre

Check the invoice route and issue deadline, and calculate VAT for a single transaction.

Illustrative example by Madar

BHD 500 furnished apartment

A furnished residential apartment rented for BHD 500 with no separate furniture charge is wholly treated as real estate. If the contract states BHD 450 rent and BHD 50 for removable furniture, the separate component must be classified independently.

Questions to help you apply it

  • Exclusive designated space?
  • Separately charged Services?
  • Removable furniture?
  • Separate furniture Consideration?