"Is VAT on the table?"  

"I think so," I replied.  

 "Are you worried?" 

I said ‘No’. 

 "Why?" 

"I am coming from a country where I am happily paying nearly 30 per cent tax and realise that such taxes as a need of the hour for a growing economy."

"Do you think the VAT is going to make life tougher for an expat in Bahrain?" 

"I don’t think so. If Bahrain follows the VAT implementation pattern of The UAE and Saudi Arabia, then the total increase in the spending after VAT on an expat is between 2 and 2.5 per cent. 

"This is mainly because the spending on basic goods and services (provisions, rent, health care, education etc.) are exempted from VAT."

 "Whom do you think is going to face some issues with the implementation of VAT?"  

 "I think medium-sized companies may face issues with their cash flows." 

 "Why do you think so?"

 "I think the biggest challenge a moderate expat businessman is going to face is nothing but the cash flow. The recent trends with regard to the cash flow in the market are not so encouraging. 

"Six to nine months credit period has become a fashion. It is not easy for an expatriate businessmen to obtain a loan or an overdraft facility without providing collateral as security from the bank.

 "If such businessmen are forced to pay the tax from their pockets before receiving the money from the client then it can make their life really difficult."

 "What is the solution?"

 "I am wondering whether the law can be made in such a way that the tax has to be paid only once the cash is received from the customer rather than paying it at the time of invoicing. 

"For sure, this will make the lives of businessmen more comfortable."  

"If not the medium-sized companies running with cash flow issues will be forced to merge with bigger groups for survival. But the chances of such merger looks like very remote.

"The next options include closing down the business operation in full or running the show with a minimal turnover. In such cases, the bigger companies with better cash flow will only exist. This can lead to a sort of monopoly in the market."  

 "What about the media sector?"  

"The print media is facing lots of challenges to survive. Being honest, I think the government should exempt print media from VAT. "

"Being an Indian expatriate, what is your biggest challenge? 

"Bahrain is yet to sign the Double Taxation Avoidance Act  (DTAA) with India. I think it is time for both countries to look into this issue. I think signing DTAA will make Indian expatriates in Bahrain happy."

The Bahraini man who went on asking questions is one of my good old friends. We accidentally met at Mc Donald’s after years. 

Being in media he expected me to have some basic knowledge on this subject. Being frank I acted like an expert on this subject with the limited knowledge I gained from some experts.  

What about eateries? 

Before answering his question, I couldn’t resist eating the burger.  While enjoying the first bite I told him, “If we buy a bun, cheese and burger from a cold store then it is all VAT free, but if you buy a sandwich from a restaurant made using these items then you have to pay 5 per cent tax”!

He gave me a look. I know he was confused. In fact, I wanted to tell him that I was in a bigger confusion over VAT.  

I think till this year-end we can all give and take such 5pc VAT free advises. So why not? Wish you all the last tax-free weekend!