Effective 1 January 2019, the Bahrain government passed a new Value Added Tax (VAT) law under Royal Decree No. 48 of 2018. This introduced a VAT at a 5 percent standard rate on goods and services that are not exempt from VAT or taxable at a zero percent rate. VAT will apply to non-life insurance premiums, such as those for medical and accident insurance. The implementing regulations are expected to be published soon.

The new VAT law is based on the VAT unification agreement of the Gulf Cooperation Council (GCC), published on 21 April 2017. The 5 percent VAT rate has been agreed to by all GCC member states with an implementation deadline of 1 January 2019.