Key Divergence Areas
📊 IFRS 15 — Revenue Recognition
IFRS 15 recognizes revenue based on performance obligations. VAT point of supply may differ — VAT triggered on invoice date or payment date (whichever is earlier), not necessarily when revenue is recognized under IFRS.
🏢 IFRS 16 — Lease Accounting
IFRS 16 capitalizes most leases. For VAT, each rental payment remains a separate supply. The right-of-use asset on your balance sheet has no VAT implication — VAT follows the periodic payments.
📋 IAS 37 — Provisions
Accounting provisions for future costs do not trigger VAT. Input VAT is only recoverable when the actual supply is received and a valid tax invoice is obtained.
💰 IAS 12 — Income Taxes
With Pillar Two DMTT approaching, deferred tax calculations under IAS 12 become relevant for Bahrain entities for the first time. Temporary differences between accounting and tax bases will create deferred tax assets/liabilities.