Bahrain will double value-added tax to 10 percent in an effort to boost revenues and curb one of the Gulf’s widest budget deficits as the economy begins to recover from the pandemic, according to an official close to the government.
The Gulf country decided to raise VAT following a comprehensive spending and revenue review, the official told Bloomberg, as the government looks for ways to rebalance its finances without undermining an economy in recovery mode.
Bahrain is under fiscal strain despite a $10 billion bailout package pledged by its wealthier neighbours in 2018. Last year, it said it was putting some of its reform efforts on hold to focus on helping the economy cope with the double shock of Covid-19 and a fall in oil prices.
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