Bahrain is considering doubling the rate of VAT to 10%, in a move which Fitch Ratings estimates could boost government revenue by 1.5-2%.
The move is redolent of neighboring Saudi Arabia’s decision to triple the rate of VAT to 15% last year at the height of the Covid-19 pandemic (MEES, 15 May 2020). That move certainly shored up the Saudi balance sheet, with non-oil revenues overtaking oil revenues in the second half of 2020 as a result. However, the move also generated significant inflationary pressures which have yet to dissipate (MEES, 13 August). (CONTINUED - 271 WORDS)
