Bahrain to impose 15% profit tax on large multinational firms

RIYADH: Multinational firms operating in Bahrain will now face a 15 percent tax on profits generated within the kingdom if their global revenues exceed €750 million ($830 million). 

The Gulf nation has introduced the Domestic Minimum Top-up Tax for Multinational Enterprises under Decree Law 11 of 2024, the National Bureau for Revenue announced. 

Effective Jan. 1, the new tax framework aligns with the Organisation for Economic Co-operation and Development guidelines, reinforcing Bahrain’s commitment to global economic fairness and transparency. 

The move is part of the Kingdom’s ongoing engagement with the OECD, which began in 2018 when the country joined the Inclusive Framework and endorsed the two-pillar international tax reform. 

Under this reform, the OECD’s Global Minimum Corporate Tax mandates that large MNEs pay a minimum tax of 15 percent on profits in every country where they operate. 

The introduction of the DMTT is part of Bahrain’s efforts to align with international tax standards and ensure that large MNEs pay their fair share to the local economy. 

The new law will apply exclusively to MNEs with global revenues exceeding €750 million. These companies are required to register with the National Bureau for Revenue in accordance with the deadlines outlined in the legislation. 

The OECD projects that the global minimum tax policy will reduce under-taxed profits by around 80 percent, as it applies across geographies, national income boundaries, and tax haven structures. 

More than 140 countries have already committed to implementing the new global tax agreement to ensure that multinational companies pay a minimum tax rate. 

Bahrain is currently the first among Gulf nations to officially enact the legislation with other neighboring countries expected to follow suit. 

Saudi Arabia, Kuwait, Oman, the UAE, and Qatar have all expressed commitment to applying the new tax reform. 

The UAE introduced a federal corporate tax law last year, with a standard of 9 percent rate. 

Saudi Arabia already has a 20 percent income tax on adjusted net profits. 

Kuwait also imposed a 15 percent corporate surcharge on profits made by foreign companies operating in the nation. Despite the similarity, the tax is not part of the policy. 

Oman shares Kuwait’s similarities but with certain incentives and exemptions available for specific industries. 

Qatar levies a corporate tax of 10 percent on foreign companies’ profits, while Qatari-owned businesses and Gulf nationals are exempt from corporate income tax but contribute to Zakat.