Bahrain imposes new tax on big multinational firms

Bahrain has announced the introduction of a domestic minimum top-up tax (DMTT) for multinational enterprises (MNEs) as outlined in Decree Law (11) of 2024.

This Decree Law will apply exclusively to large MNEs operating in the kingdom, with global revenues surpassing the Pillar Two threshold of €750 million ($829 million). Such businesses have been asked to register with the National Bureau for Revenue (NBR) before the deadline specified in the relevant legislation, a Bahrain News Agency report said.

The new framework for MNEs is fully aligned with the Organisation for Economic Co-operation and Development (OECD) guidelines, and will be effective January 1, 2025, underscoring Bahrain’s commitment to promoting global economic fairness and transparency, said the report.

This strategic move builds on Bahrain’s proactive engagement with the OECD, dating back to 2018 when it joined the Inclusive Framework and endorsed the groundbreaking two-pillar reform. To date, over 140 jurisdictions have signed up for this international tax reform. As part of this two-pillar reform, the OECD established a Global Minimum Corporate Tax to ensure large MNEs pay a minimum tax of 15 per cent on profits in each country where they operate.

With the introduction of the DMTT, demonstrates its international commitment to global cooperation and its dedication to fostering a fair and level playing field in international taxation. Implementing this initiative aims to ensure that MNEs pay the minimum 15 per cent tax on the profits generated in the kingdom, it said.