What Are Digital Services?
Under Bahrain VAT Law, "electronically supplied services" include any service delivered over the internet or electronic network that is essentially automated and requires minimal human intervention.
Cloud & SaaS
Streaming & Downloads
Apps & Games
Digital Advertising
Web Hosting
Online Courses
Place of Supply Rules
🏢 B2B: Where The Customer Belongs
Digital services to a VAT-registered business are taxed where the customer is established. Bahrain supplier to overseas B2B = zero-rated (export). Foreign supplier to Bahrain B2B = reverse charge at 10%.
👤 B2C: Where The Supplier Is
Digital services to non-business customers are generally taxed where the supplier is established. Foreign suppliers making B2C digital supplies to Bahrain customers may need to register for VAT.
Key Considerations
- App store marketplace operators (Apple, Google) typically handle VAT as the deemed supplier
- SaaS subscriptions billed monthly create continuous supply VAT timing
- Free trials converting to paid — VAT from first paid invoice
- Digital advertising services may have complex multi-jurisdiction issues
- Distinguish between digital and professional services for place of supply