Bahrain Tribune, 6 July 2026: The Bahraini government has advised Parliament to drop a bill granting civil society organisations VAT zero‑rating, warning it would undermine public finances and breach Gulf tax rules.
The proposed amendment to Article 53 of Bahrain Decree-Law No. 48/2018 Regarding Value Added Tax sought to apply a zero rate to the supply of social care services and related goods provided to associations, cultural clubs, and youth and sports bodies. MPs argued that such groups perform non‑profit work and should receive support similar to schools and healthcare institutions.
In a memorandum to the Council of Representatives, the government opposed the bill on five grounds: existing aid mechanisms already support these groups; tax law is not the appropriate tool for welfare aims; the measure would reduce state revenue; it would conflict with VAT’s core principles; and civil society groups cannot be equated with schools and hospitals.
Authorities highlighted that social organisations under the Ministry of Social Development already receive grants, rehabilitation centre funding, project aid, state land, free use of halls, and partnership arrangements. Cultural and arts bodies benefit from support under a 2015 rule administered by the Bahrain Authority for Culture and Antiquities, covering activities, travel, shipping, venues, and media assistance. Sports clubs and youth organisations receive annual funding and logistical support through the General Sports Authority, while youth centres are aided by the Ministry of Youth Affairs.
The government concluded that grants and budgetary schemes are better suited to welfare objectives, as they can be targeted, monitored, and adjusted, unlike VAT exemptions which would broadly reduce costs without oversight.
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