Bahrain Tax Authority Introduces e-invoicing in Bahrain

The National Bureau for Revenue (NBR) in Bahrain, via the Bahrain Tender Board, has invited proposals to enhance the legal framework for launching e-invoicing. Bahrain is aligning with global trends and following the footsteps of other countries like the Kingdom of Saudi Arabia (KSA) in implementing e-invoicing. Based on experience aiding businesses in KSA, here are key considerations for Bahrain's upcoming e-invoicing implementation:

1.  Purpose of E-invoicing: The introduction of e-invoicing aims to level the playing field for Bahraini businesses, reduce administrative burdens, aid economic policy development by collecting detailed economic data, and bolster Bahrain’s fiscal balance by curbing tax leakages with minimal disruption to economic activities.

2. Understanding E-invoicing: E-invoicing transforms paper-based invoicing into an electronic process, facilitating structured exchanges between suppliers, customers, and tax authorities. This process is conducted through integrated electronic solutions, and once issued; an e-invoice cannot be altered without issuing a credit or debit note.

3. Applicability: VAT-registered businesses and third parties issuing tax invoices for others will need to comply with e-invoicing. Specific requirements might differ based on business nature, annual supply value, and transaction volume. Implementation could follow a phased approach, potentially starting with larger or specific industry businesses.

4. Timeline: While a formal timeline hasn't been announced, e-invoicing implementation in Bahrain is anticipated within the next 18 months. Similar to KSA's phased approach, initial phases may involve issuing and storing e-invoices followed by integration with tax authority systems.

5. Technical Requirements: Expected technical requisites for e-invoicing solutions include connectivity with the internet and an API provided by the NBR, robust security measures to prevent tampering, and compliance with Bahrain's legal standards for data security.

6. Challenges and Lessons: Challenges include ensuring secure high-speed internet access, integrating POS and ERP systems with the NBR platform, implementing stringent security measures, and adapting to the structured nature of e-invoices, which cannot be altered post-issuance.

7. Preparation for Bahrain Businesses: Ahead of the formal NBR announcement, businesses should conduct gap assessments to identify impacted systems, map applicable transaction flows, assess existing system capabilities for integration, evaluate cyber security readiness, update records, and provide staff training.

E-invoicing presents a significant shift for Bahrain businesses, demanding substantial process adjustments and system upgrades. We've supported businesses in KSA through impact assessments, offering recommendations, aiding in vendor selection, and providing implementation support to meet e-invoicing requirements.