Business taxes:
we separate the current from the project

01

Three different enterprise modes

VAT

10% consumption tax; valid for taxable supplies/imports

DMTT

15% minimum tax for Bahrain entities qualifying MNE groups

Proposed CIT

10% on a portion of the profits of certain local businesses; not yet in force law

Oil & gas

Special income-tax regime for relevant companies

Excise

Separate tax on certain goods

02

VAT: 10% as initial rate

The standard rate applies from 1 January 2022. Certain supplies are taxed at 0%, exempt or outside scope. Zero-rated and exempt give different input VAT results, so classification is more important than a simple rate label.

Standard

10%

Zero-rated

In particular, qualifying exports and individual goods/services by law

Exempt

Certain financial services and real estate supplies

Reverse charge

Importing services and other cases according to rules

Input tax

Deductibility is related to taxable use and evidence

03

VAT lifecycle

1. 01
   Threshold test

   Actual/expected taxable supplies and resident status.

2. 02
   NBR profile

   Entity data, contact, CR and supporting documents.

3. 03
   Registration

   Effective date and VAT account number.

4. 04
   Operations

   Tax invoices, coding, returns and payment.

5. 05
   Changes

   Address, activity, branch, group and deregistration.

04

DMTT valid from 2025

Decree-Law 11/2024 and Executive Regulations 172/2024 apply to financial years beginning on or after 1 January 2025. The goal is to bring the effective tax rate of Bahrain constituent entities qualifying MNE group to 15% in accordance with Pillar Two design.

05

Who is included in the DMTT scope

The NBR indicates consolidated global revenue of at least €750 million in two of the four immediately preceding financial years. Constituent entities, joint ventures/subsidiaries, excluded entities, safe harbors and GloBE status are analyzed.

Revenue test

€750m in 2 of the 4 previous years

Location

Constituent entity or qualifying JV in Bahrain

Registration

One designated filing entity per MNE group; separate JV circuit if necessary

Calculation

GloBE income, covered taxes, ETR and top-up tax

Evidence

Consolidated accounts, entity mapping, elections and data controls

06

Proposed local corporate tax from 2027

An official NBR report dated December 30, 2025 describes the bill: 10% on profits above BHD 200,000 for local companies if revenue exceeds BHD 1 million or annual net profit exceeds BHD 200,000, with target application in 2027 after the legislative process. Until the law is adopted, thresholds, deductions, definitions and commencement are not considered final.

Status

Draft law, not valid tax

Announced rate

10%

Announced profit band

Over BHD 200,000

Announced entry tests

Revenue > BHD 1m or net profit > BHD 200k

Target

2027, subject to legislation

DMTT groups

NBR stated no double overlap of 10% on top of 15%

07

Cross-border transactions

VAT place

Place supply and customer status

Related parties

Features, price and documentation

Treaty

Residence certificate and income article

Permanent establishment

People, fixed place, agent and projects

Pillar Two

Data consistency across entities and jurisdictions

Banking

Contract, invoice, tax treatment and payment purpose are the same

08

Accounting must withstand the tax transition

Even business outside DMTT needs a high-quality chart of accounts and a documented revenue/expenses split: a proposed CIT may require prior-year comparatives, opening positions and related-party data. VAT records already provide the basis for reconciliation.

09

CFO plan

1. 01

   Confirm VAT mapping, registration and input tax controls.

2. 02

   Check MNE revenue test and Bahrain entity map.

3. 03

   Configure DMTT data owners, calculations and filings.

4. 04

   Simulate the proposed CIT without recognizing it as valid.

5. 05

   Track laws, regulations and NBR guidance until 2027.