# Bahrain **URL:** \ **Category:** Uncategorized\ **Created:** [November 9, 2021, 8:43pm UTC](https://forum.manager.io/t/bahrain/37903 "2021-11-09T20:43:52Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 19, 2021, 11:57pm UTC](https://forum.manager.io/t/bahrain/37903/24 "2021-11-19T23:57:29Z")
We don’t really. It’s just to hold the reverse sign reverse charged taxable amount just so I can figure out where the difference in totals is coming from. But that will be gone once that’s sorted out. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 20, 2021, 12:17am UTC](https://forum.manager.io/t/bahrain/37903/25 "2021-11-20T00:17:09Z")
I just checked Ireland localization and it seems like the entire issue was about the tax amount and not the taxable amount. So I guess I have some explaining to do here: Here’s a sample of the tax return without reverse signing the RCM Tax codes: ![Screenshot_20211120-030219~4](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/9/7/97d9d2df1d687b6c88f185f471f490bae0079277.png) The first column adds up. However the RCM codes are negative. In the tax return form, we can only enter taxable amounts and the tax portal will calculate the tax amounts for. This creates two problems 1. The `VAT/I - RCM` must be added to item 1. The tax portal expects us to input 300 for item 1 (100 VAT+200 RCM) to get the correct 15 tax amount. But it’s not possible at the moment. 2. if I keep the `VAT/I - Domestic RCM` in it’s own cell and reverse the sign, the totals will not add up anymore. ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [November 20, 2021, 12:24am UTC](https://forum.manager.io/t/bahrain/37903/26 "2021-11-20T00:24:58Z")
> [@Ealfardan](#): > > The `VAT/I - RCM` must be added to item 1. and that’s not currently possible. I’m not sure why not… are you sure you are using realistic transactions? When I click on your `Standard rated sales` figure, I see purchase invoice transaction in there. ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/2/7/2728778e729a38c48820467be0a1b2ad062ff928.png) Shouldn’t you use sales transactions for sales-related tax codes? ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 20, 2021, 12:38am UTC](https://forum.manager.io/t/bahrain/37903/27 "2021-11-20T00:38:56Z")
Reverse charged rates only apply to purchases. The reverse charge is when you create input (purchase) VAT charge and an output (sales) VAT charge on a VAT free purchase transaction. This way if you have say 20% exempt supplies, and you have imported a service from abroad for 100. You have this effect going on for the RCM transaction. | Tax item | Tax w/o RCM | Tax w/RCM | | --- | --- | --- | | **Taxable amounts** | | | | Output | 0 | 100 | | Input | 0 | 100 | | **Tax amounts** | | | | Output | 0 | 5 | | Input | 0 | -5 | | Apportiontment 20% of input VAT | 0 | 1 | | **Net tax liability on import** | **0** | **1** | Note that apportionment only affects input VAT claimed. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 20, 2021, 12:52am UTC](https://forum.manager.io/t/bahrain/37903/28 "2021-11-20T00:52:23Z")
In simpler terms, it’s the government’s way of saying if you import something and it skips being charged VAT at customs you will have to pay the full VAT (output vat) of it and claim back only a part of it (input vat less apportionment). ---
**Author:** ![danowagroup](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/danowagroup/32/19710_2.png) [@danowagroup](https://forum.manager.io/u/danowagroup)\ **Post date:** [November 20, 2021, 4:36pm UTC](https://forum.manager.io/t/bahrain/37903/29 "2021-11-20T16:36:04Z")
It’s highly advisable that the Localization to be divided into phases: **Phase 1:** Apply and fix those issues that were already applied and implemented. **Phase 2:** Any future requirements to be consider once we perfected the phase 1. Currently the dilemma is how to get the VAT Returns working from top to bottom based on the current VAT rules and regulations, since the next VAT Returns over our head Dec 31, 2021 (4th Qtr). Therefore the focus to fix the Net VAT Due or Claim, once we have the confidence that phase 1 is completed than we can work to complete phase 2, the RCM and other systems GCC Intra VAT etc are not even announced to be apply or not. Note: We are advocating Manager since 2015 and applied several useful changes as part of eco-system, not good to be called as no participation without having the past knowledge…. Good work done by anyone is highly appreciable but we need to see the timing and set our priorities. @lubos kindly let’s fix the existing report for VAT as it’s an immediate challenge. If you are applying Input and Output VAT separate than we have to convince the users about this change and may the VAT rate revise not yet confirmed though from the beginning of 2022. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 20, 2021, 7:20pm UTC](https://forum.manager.io/t/bahrain/37903/30 "2021-11-20T19:20:01Z")
> [@danowagroup](#): > > **Phase 1:** > Apply and fix those issues that were already applied and implemented. What issues? > [@danowagroup](#): > > Therefore the focus to fix the Net VAT Due or Claim The VAT due figure was always matching the Tax summary report since day 1. > [@danowagroup](#): > > the RCM and other systems GCC Intra VAT 1. The RCM was in effect starting day 1 of VAT adoption in Bahrain, however, as discussed [earlier](https://forum.manager.io/t/bahrain/37903/27), it’s only a necessity if you have mixed taxable/exempt supplies. 2. The unified GCC VAT though not yet implemented, you’re still expected to report GCC exports @ VAT0% separate from all other exports. > [@danowagroup](#): > > you are applying Input and Output VAT separate than we have to convince the users about this change and may the VAT rate revise not yet confirmed though from the beginning of 2022. 1. Continuing to use unified tax codes for Sales and Purchases isn’t a valid option anymore. The only way to ensure conformance with tax forms is to separate those. This isn’t specific to the case of Bahrain, this is a global change. 2. Once localizations are finished, you will be able to restrict use of codes (e.g. Input VAT 5% will not show on sales invoices, Export VAT will not show on purchase invoices, Adjustment codes will only be available in Journals, CRN and DRN and apportionment will only be available in Journals) so you will never confuse the two. No convincing is required for end users because they will eventually have a shorter more precise list will smaller room for error. 3. You can always go to **Settings** \> **Tax Codes** and make any unwanted tax codes disappear by checking this box: ![Screenshot_20211120-220859~2](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/4/c/4c2a0229400c28f99c98da8f56edf8c5e751f5ec.png) > [@danowagroup](#): > > but we need to see the timing and set our priorities. I haven’t heard any requests from any Bahraini users – including yourself – regarding wanting a localization. So now that it’s already announced, suddenly it’s a matter of life and death! Sorry but I can’t follow your logic. # Finally and more importantly I can see from your comments that you’re upset for some reason. But you can just randomly point fingers here and there because people will be quick to point out any false statements. Instead, you need to provide a valid reason for your requests in order for it to be taken seriously. For example: - **Did you already install Bahrain localization?** - **Did you face any problems with merging of tax codes?** - **Do you require any help whatsoever with managing the transition?** If you have any such problems please say so and everybody will be glad to offer you help. Do you? ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [November 20, 2021, 9:40pm UTC](https://forum.manager.io/t/bahrain/37903/31 "2021-11-20T21:40:02Z")
> [@Ealfardan](#): > > In simpler terms, it’s the government’s way of saying if you import something and it skips being charged VAT at customs you will have to pay the full VAT (output vat) of it and claim back only a part of it (input vat less apportionment). OK, so we have reporting category `VAT/I - Domestic RCM 5%` which shows in row 11. ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/1/b/1b61da7225050e772958365cff135da6b47a4330.png) An then again as part of total purchases. ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/2/3/237b50e8fde8353778f4ebe7bfa7cba7255c2d46.png) I agree with this and no problem. My issue is that you want to show this purchase amount under `Total sales` too. ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/4/4/447005ea7b0a2d4ce82593d75a73fd95dd185862.png) And I think this is problematic. What I suggest is that `Standard Rated Sales` would simply be this. ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/b/1/b1e654af821be1f840ab539b01ccb461e8b5e786.png) And `Total sales` this: ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/0/5/05d882cfdbde981554d252e621d39ffc8ac44f5c.png) To my knowledge, in other countries, it is not expected for reverse charged purchases to inflate your sales figures. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 20, 2021, 9:55pm UTC](https://forum.manager.io/t/bahrain/37903/32 "2021-11-20T21:55:45Z")
The total sales part can be removed entirely. My problem is with item 1. Item 1 should add up: 1. VAT/O - Standard 5% 2. VAT/I - RCM 5% – sign reversed Because this taxable amount will be inputted into tax portal so they calculate the tax amount correctly. ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [November 20, 2021, 10:00pm UTC](https://forum.manager.io/t/bahrain/37903/33 "2021-11-20T22:00:08Z")
For domestic RCM, there is ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/2/b/2bcd1e0e19f8a659ec4af710a990a95f13b90265.png) How come there is no field for RCM imports? Because that would solve this problem just like it’s solved with domestic RCM. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 20, 2021, 10:57pm UTC](https://forum.manager.io/t/bahrain/37903/34 "2021-11-20T22:57:17Z")
I really have no idea. In the UAE, the entire RCM is grouped together in one line item and that’s more logical. But here in Bahrain, domestic RCM is displayed separately and the import RCM is combined with standard rated supplies. Just to drive home the point of not mixing up domestic and import output RCM, there’s a context help note on the former that reads: > Sales at standard rate that are made to a domestic purchaser who has the right granted by NBR (supported by a valid certificate) to apply the domestic Reverse Charge Mechanism ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [November 20, 2021, 11:12pm UTC](https://forum.manager.io/t/bahrain/37903/35 "2021-11-20T23:12:21Z")
I found this screenshot. It doesn’t look like you can enter `VAT amount` in `VAT on sales` anywhere except for `Standard rated sales`. I don’t really understand why on purchase side, VAT amount for reverse charge mechanism is shown and on `Sales` it’s not. How does this balance out? ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/1/c/1c7100a2da315adfcb13c57352c872b7b817d496.jpeg) Also, this entire concept of submission that “You tell us your total sales” and “We tell you VAT amount” is going to cause problems due to rounding. For example. You are reporting 100 sales 1.09 each which would have VAT 0.05 each. Total sales is 109.00 and total VAT collected is 5.00. Then you enter 109 sales into this form and this form will multiply 109 by 0.05 and will insist you have collected 5.45 in VAT even though you collected 5.00 only. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 20, 2021, 11:37pm UTC](https://forum.manager.io/t/bahrain/37903/36 "2021-11-20T23:37:17Z")
> [@lubos](#): > > It doesn’t look like you can enter `VAT amount` in `VAT on sales` anywhere except for `Standard rated sales`. Actually, all the blue cells are “automatically populated” as you can see in the legend at the bottom of the screenshot. So, you really can’t enter the `VAT amount` anywhere except for previous period corrections. > [@lubos](#): > > Also, this entire concept of submission that “You tell us your total sales” and “We tell you VAT amount” is going to cause problems due to rounding. That’s true but that’s not something that a journal entry can’t handle. I usually post it without a tax code and it would show up in the `Tax Reconciliation` report as other movements. I am not worried about that, though. ---
**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\ **Post date:** [November 20, 2021, 11:41pm UTC](https://forum.manager.io/t/bahrain/37903/37 "2021-11-20T23:41:28Z")
> [@Ealfardan](#): > > Actually, all the blue cells are “automatically populated” as you can see in the legend at the bottom of the screenshot. Yeah, I get that. But my point was that for example, in line 3 where it says `Sales subject to domestic reverse charge mechanism`, there isn’t even `VAT amount` field. So how does it balance out in the end if reverse charged tax amounts are shown in purchases but not in sales section. Could you enter random figures into this form into every field and then take screenshot? ---
**Author:** ![Patch](https://avatars.discourse-cdn.com/v4/letter/p/a183cd/32.png) [@Patch](https://forum.manager.io/u/Patch)\ **Post date:** [November 20, 2021, 11:49pm UTC](https://forum.manager.io/t/bahrain/37903/38 "2021-11-20T23:49:43Z")
> [@lubos](#): > > VAT amount” is going to cause problems due to rounding. That applies to all VAT submissions. There is always a difference between the rounding used but the tax authority and that used by Manager. For example in Australia cents a generally not included (the allowed rounding options varying with each form). The ideal solution is for the Manager localisation to calculate the difference in rounding used by Manger and that used by the tax authority which can then be used when entering the payment to ensure exact clearance of holding accounts. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 21, 2021, 7:15am UTC](https://forum.manager.io/t/bahrain/37903/39 "2021-11-21T07:15:48Z")
> [@lubos](#): > > So how does it balance out in the end if reverse charged tax amounts are shown in purchases but not in sales section. It doesn’t balance out > [@lubos](#): > > Could you enter random figures into this form into every field and then take screenshot? I am on it ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 21, 2021, 7:18am UTC](https://forum.manager.io/t/bahrain/37903/40 "2021-11-21T07:18:40Z")
> [@Patch](#): > > The ideal solution is for the Manager localisation to calculate the difference in rounding used by Manger and that used by the tax authority which can then be used when entering the payment to ensure exact clearance of holding accounts. That’s a lot of work for just fractions, wouldn’t you agree? You can call me lazy but I would rather just write-off or write-on the difference using a journal entry and that’s all the effort I am willing to put in. 😬 ---
**Author:** ![Patch](https://avatars.discourse-cdn.com/v4/letter/p/a183cd/32.png) [@Patch](https://forum.manager.io/u/Patch)\ **Post date:** [November 21, 2021, 7:49am UTC](https://forum.manager.io/t/bahrain/37903/41 "2021-11-21T07:49:28Z")
> [@Ealfardan](#): > > I would rather just write-off or write-on the difference The suggestion is the Manager localisation tells you what the journal entry amount should be for. Journal entry or adjustment on the payment achieves the same thing. In both cased someone needs to know what amount to write-off. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 21, 2021, 7:57am UTC](https://forum.manager.io/t/bahrain/37903/42 "2021-11-21T07:57:35Z")
Yes, that could be very useful, I guess that is achievable using the script section of report transformations. ---
**Author:** ![Ealfardan](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/ealfardan/32/63166_2.png) [@Ealfardan](https://forum.manager.io/u/Ealfardan)\ **Post date:** [November 21, 2021, 8:57pm UTC](https://forum.manager.io/t/bahrain/37903/43 "2021-11-21T20:57:15Z")
> [@lubos](#): > > Could you enter random figures into this form into every field and then take screenshot? Done. Here are the most relevant screenshots ![image](https://us1.discourse-cdn.com/flex019/uploads/manager1/original/3X/9/a/9a3f5bb4d1b8aae22b8c751831a71126d6db9971.png) Note the following: 1. Item 1 Tax Amount is more than 5% of Taxable Sales. This is the breakdown of it: 2. The Domestic RCM has been reverse signed in outputs, this made it impossible to reverse sign it in inputs because they have the same ID and somehow this messed something up. Please check it out. 3. The total sales is off due to what we’ve discussed earlier. Should I just remove the total sales and total purchase amount and leave the totals showing tax amounts only? Also, > [@lubos](#): > > I wonder why we need sales exceptions. Sales exceptions removed. I just kept a note at the bottom. Also also, > [@lubos](#): > > To my knowledge, in other countries, it is not expected for reverse charged purchases to inflate your sales figures. I missed this before, but if you miss accounting RCM outputs, your apportionment becomes larger and you end up overpaying the government. Suppose we have made 10,000 taxable sales and 10,000 exempt sales, this means that you need to apportion (write-off) 50% of your claims, that is `[10,000 / (10,000 + 10,000)]` . Now suppose you also have 5,000 in RCM purchases, this would lower your apportionment to 40% which is `[10,000 / (10,000 + 10,000 + 5,000)]`. The idea is that when you import you must pretend to have generated the supplies and sold it to yourself, if that makes any sense. [Previous page](https://forum.manager.io/t/bahrain/37903.md?page=1) [Next page](https://forum.manager.io/t/bahrain/37903.md?page=3)