Urgent.. The fact of canceling VAT on electricity and water
The fact of canceling VAT on electricity and water
Lawyer Mohammed Al-Thawadi today filed a lawsuit before the Grand Civil Court - the administrative department to cancel the decision to apply VAT on the services of the Electricity and Water Authority as a plaintiff against the Minister of Electricity and Water Affairs as his first defendant and the Executive Chairman of the Electricity and Water Authority as a second defendant.
He said that he is a Bahraini citizen and a member of the Electricity and Water Authority. The plaintiff is surprised by a letter sent by the Electricity and Water Authority on 8/1/2019, sent by e-mail, which indicates the application of VAT on electricity and water services by 5% Retroactively, as of January 2019, and accompanied by the Authority's tax registration certificate. (Attached copy of the letter and the tax registration certificate). Document No. (2).
3. Whereas the first paragraph of Article (9) of the Decree-Law No. (48) of 2018 on Value Added Tax expressly stipulates:
"Supplies provided by government agencies shall be subject to tax as long as they are operated in a non-sovereign manner through the exercise of economic activity in accordance with competitive mechanisms with the private sector"
According to this provision, the legal legislator required the main conditions for subjecting the supplies of government agencies to value added tax, the most important of which are:
(A) The Government shall not exercise such services in a sovereign capacity.
B) The possibility of competition between the government and the private sector in providing services.