NSA Bahrain N8 Department Establishes Value Added Tax Relief Program

The zero-rated VAT applies to goods and services for official use by U.S. Armed Forces, as well as those acquired by authorized U.S. military retail outlets for resale to U.S. Forces. According to Yusuf Mahchi, the NSA Bahrain VAT coordinator, this initiative will save the U.S. Armed Forces and DoD entities in Bahrain millions of dollars per year.

“The establishment of the program was an installation-wide heavy lift and took years of work with U.S. Naval Forces Central Command (NAVCENT), the contracting commands and the financial management offices to get us to where we are now,” said Mahchi. “Securing the exemption is a big deal; it means at least $8 million annually in savings for the U.S. government if properly implemented. We still have a lot to do to make sure it runs well and we can recuperate the over $25 million spent on taxes over the years.”

VAT was originally introduced on Jan. 1, 2019 at a rate of 5% and was raised to 10% in January 2022. In November 2022, Mahchi, in coordination with NAVCENT’s N5 Department, secured in writing a zero-rate treatment for all DoD activities in Bahrain, as well as authorization to seek a full refund for any VAT payments made by U.S. Armed Forces.

As of Nov. 1, All U.S. Forces and DoD entities operating in Bahrain will be charged a zero-rate VAT for all goods and services acquired. Capt. Zachariah Aperauch, NSA Bahrain’s commanding officer, was thankful for both the hard work of the N8 team and the generosity of the host nation.

“For years now, our NSA Bahrain team, alongside NAVCENT and our host nation partners, have done a tremendous job seeing this through from conception to fruition,” said Aperauch. “The Kingdom of Bahrain is one of our oldest and closest partners, and this agreement means so much - not only to myself and the 147 tenant commands operating here on our installation - but the U.S. government as a whole.”

NSA Bahrain’s mission is to support U.S. and coalition maritime operations throughout the U.S. 5th Fleet area of operations by providing security for ships, aircraft and tenants on board NSA Bahrain and assigned detachments. NSA Bahrain provides efficient and effective shore services to sustain the fleet, enable the fighter and support the family with honor, courage and commitment.