Abstract
Value Added Tax (VAT) is a consumption tax is being charged on goods and services. VAT is a major worldwide tax instrument which enhances economic growth. Recently GCC countries has executed VAT and Kingdom of Bahrain also implemented it as on 1st January 2019. The aim was to increase the revenue base of Government and make fund available for developmental purposes that will accelerate economic growth. This research aim is an empirically examination on the contribution of VAT to the growth of economy and identify the reasons of implementing the VAT in the Kingdom of Bahrain and to outline the effects, benefits, and challenges of doing so. This study provides certain considerations to be taken in line of Kingdom of Bahrains economic environment, these considerations are mainly aimed to define the effects of VAT related SMEs and other business, VAT as a cultural policy tool, and the implications of VAT. As well as defining expected challenges related to levels and rates of VAT compliance, periodical changes in VAT laws, VAT collections and refunds, financial literacy, complexities of VAT legislation, and control over the cost of living. The data of this study was collected from secondary and primary sources from selected SMEs, business, and general public overview of Kingdom of Bahrain. Some findings and suggestions are addressed in the study that may be the prerequisite for banking organizational growth and development.
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