Bahrain - A construction company proprietor has been convicted of evading more than BD35,000 in value-added tax (VAT), though he blamed the Covid-19 pandemic for not receiving payments from clients.

The High Criminal Court sentenced the man to six months in prison and ordered him to pay back BD35,327 of unpaid taxes.

He was also fined an additional BD35,327.

The 52-year-old Bahraini businessman faced charges of ‘total tax evasion’ after failing to pay dues on taxable services provided by his construction company over the course of four years.

He admitted to not paying the levy, but claimed that he could not afford the VAT as he did not receive payments for work carried out by the company during the pandemic.

According to Sijilat commercial registration (CR) records, the single-person company (SPC) is licensed to construct buildings, carry out demolition work, prepare sites for construction and equip buildings with electric wiring to connect to the grid.

Court documents state that the evasion began in 2021 but was uncovered in 2024, when National Bureau for Revenue (NBR) officials found a discrepancy in the company’s paperwork.

The company’s general director reportedly accrued BD35,327 in unpaid taxes over six instalments, with the amounts being BD12,313, BD6,757, BD6,167, BD5,499, BD3,988 and BD603. Though the entrepreneur had submitted VAT return documentation, which specified exactly how much he owed the NBR, he did not pay them even after the 120-day deadline was over.

NBR officials testified against the defendant.

A legal consultant also submitted a detailed report about the evasion to the Public Prosecution, which was used as evidence to charge him with the crime.

Based on these statements, the defendant was convicted.

The NBR recently announced that it had conducted 814 inspection visits within the first half of 2024 in local businesses and shops across all four governorates to ensure compliance.

During these visits, agents checked if the businesses complied with VAT and excise tax, including the Digital Stamps Scheme, and reported 116 violations. They include not displaying prices inclusive of VAT, failure to issue VAT invoices, not displaying a VAT certificate in a visible location and non-compliance with the Digital Stamp Scheme.

The NBR has set up a hotline (80008001) to report tax violations, which receives calls round-the-clock.

Reports can also be made through the National Suggestions and Complaints System (Tawasul).

Queries about VAT and the Digital Stamps Scheme are received on vat@nbr.gov.bh and ds@nbr.gov.bh respectively.

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