Bahrain VAT based credit note

Businesses registered for VAT must issue tax invoices when providing taxable goods or services in Bahrain. For more information on tax invoices and simplified tax invoices, see our article Bahrain VAT Invoices. Likewise, in certain circumstances, a taxpayer may be required to issue a credit note. In this article you will learn about:

What is a credit note? When is it issued?
Required details to be included in the credit note
What is a credit note? When is it issued?
A credit note is a document that the supplier must issue in all cases where the VAT charged exceeds the VAT charged on the supply.

Situations in which a supplier may be required to issue a credit note include:

Sold goods were returned by customers
Reduction in taxable value of supplies
Reduce taxes
Let us understand credit note with an example.

On January 15, 2019, Abdul & Co. supplied 10 monitors to Alibaba Electronics at 70 BHD each. VAT levied on supplies is BHD 35. On the same day, Alibaba Electronics returned a monitor to Abdul Company because it found that the monitor was damaged. In this case, Abdul & Co. must issue a credit note to Alibaba Electronics for the returned monitors and offset the VAT charged on the monitors.

The issuance of a credit note affects:

Reduce supply tax paid by suppliers
Diminished input tax that the beneficiary is able to recoup

What are the mandatory details that must be included in the credit note?

Details required to be included in the credit note include:

The paper uses the word “credit note” specifically.
Name, address and registration number of taxable person
Customer name and address
Consecutive credit or debit order numbers
The date the credit or debit note was issued
Adjusted original tax invoice or original document number
Supply adjustment value and adjusted tax amount (dinars)
Credit note retention period
The taxable person must retain the credit note for five years from the end of the relevant tax period.

Frequently Asked Questions about Bahrain Credit Notes
Does the credit note include VAT?

Yes. If you issue a credit note for a taxable sale, you must calculate VAT. this

The reason is that the VAT in the credit note is removed from the total VAT liability for the tax period.

Are VAT credit notes refundable?

VAT credit notes are usually issued based on sales returns and are adjusted based on sales during the tax period.

Is a credit note a tax bill?

Yes, this is one of the tax documents that must be issued compulsorily in case of sales declaration or other situations specified by laws and regulations.

You can also Register for VAT Registration on our website:
https://thevatconsultant.com/

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