The most significant tax news in Bahrain for 2025 is the introduction of a 15% minimum tax on multinational enterprises (MNEs). This is a major change that will impact large corporations operating in the country.
Here's a breakdown of the key aspects:
What it is: Bahrain is implementing a domestic minimum top-up tax (DMTT) in line with the OECD's global minimum tax initiative. This means that multinational companies with global revenues exceeding €750 million will be subject to a minimum 15% tax rate on their profits in Bahrain.
Why it's happening: This move aligns Bahrain with international tax standards and aims to prevent profit shifting and tax base erosion by large multinational corporations. It ensures that these companies pay a fair share of tax in the countries where they operate and generate profits.
Who it affects: The tax applies to multinational enterprises with global revenues exceeding €750 million.
When it takes effect: The new tax will be effective from January 1, 2025.
What businesses need to do: Eligible businesses need to register with the National Bureau for Revenue (NBR) before the deadline to ensure compliance with the new regulations.
This is a significant development for businesses operating in Bahrain, particularly large multinational corporations. It's crucial for these companies to understand the new regulations and ensure they are prepared to comply.
Here's why this is the most important tax news:
Impact on large businesses: This tax will directly affect a significant number of large multinational companies operating in Bahrain.
Alignment with global standards: The introduction of this tax aligns Bahrain with international efforts to create a fairer global tax system.
Potential for increased revenue: This tax is expected to generate additional revenue for the Bahraini government.
It's important for businesses to stay informed about this change and seek professional advice if needed to ensure they are compliant with the new regulations.
Bahrain V.A.T. Rate Rise
January 2022Starting January 1, 2022 the V.A.T. rate in Bahrain rose from previous 5% to 10%.
The Bahrain revenue office published transitional provisions effective till December 31, 2022 for 5% charge for standard rated supplies in the transition period, subject to certain terms.
Bahrain V.A.T. Regime
December 2018Starting January 1, 2019 a V.A.T. regime will be implemented in Bahrain.
The 5% rate reporting will be imposed at several steps. Starting January 1, 2019 companies with annual turnover exceeding BD 5 million will have to report from that date. Companies with a turnover of BD 500,000-BD 5 million have to report starting July 1, 2019. All other businesses will report starting January 1, 2020.
Bahrain China Tax Treaty
October 2013Bahrain and China signed on September 16, 2013 a new protocol replacing the existing 2002 double tax treaty between the two countries.
According to the tax treaty the tax withholding rate for payments of dividends is 10%. The tax withholding rate for payments of interest and royalties remains as before.
The new tax treaty has yet to be ratified by the parliaments of both countries.
In general double tax treaties between two countries are boosting mutual investments between the countries offering reduced tax withholding rates from payments of dividends, interest and royalties.
The tax treaty often includes an exchange of tax information clause and definition of a permanent establishment for activities carried in the other country.
It also clarifies certain cross border tax issues.
E.g the treaty would define in what country tax is to be paid when a service supplier/consultant from country A provides services in country B.
In some treaties there is a tax credit under certain terms. E.g. an exemption to a consultant from country A of X dollars per each day of staying in country B in order to supply the taxable services.
Bahrain Credit Rating Downgraded
August 2010Moody's credit rating agency downgraded on August 23, 2010 Bahrain's credit rating from A2 to A3.
The rating which is the lowest among the six states of the Arab gulf follows worries about Bahrain's inability to meet contingent liabilities in future backed on insufficient tax revenues if oil receipts decrease.
Bahrain Malta Double Tax Treaty
April 2010The finance ministers of Bahrain and Malta signed on April 12,2010 a new double taxation agreement, DTA, between the two countries.
The agreement deals with avoidance of double taxes from all kinds of income taxes, including capital gains and and also deals with exchange of tax informaion, in line with the OECD model confirmed in the G20 summit in London.
Bahrain has now 29 DTAs, 20 are already in effect. 18 of Bahrain's DTAs are in line with the OECD model for exchange of tax information.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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