VAT may bring ‘temporary drop in business confidence’

The introduction of Value Added Tax in Bahrain is projected to have similar affects as to that of UAE and Saudi Arabia, which saw a buying frenzy prior to its implementation and a temporary drop in business confidence soon after, according to official forecasts.

VAT implementation is expected to cause a temporary fluctuation in business confidence but not cause any permanent disruption, said EDB Chief Economist Dr Jarmo Kotilaine.

He said that Bahrain would experience a similar impact as seen in Saudi Arabia and UAE, where a spike in purchasing was noticed followed by a temporary dip in business confidence.