Bahrain is set to introduce a new tax on multinational corporations operating within the country beginning in January 2024, in a move to align with global taxation reforms. The new Domestic Minimum Top-up Tax (DMTT) will require large multinational companies to pay a minimum 15% tax on profits generated in Bahrain, as reported by the Bahrain News Agency (BNA) on Sunday.
This tax will apply exclusively to multinational enterprises with global revenues exceeding €750 million ($830 million) for at least two of the previous four fiscal years. The DMTT framework is in line with the Organisation for Economic Co-operation and Development (OECD) guidelines, which aim to address tax challenges stemming from the digitalization and globalization of the economy. The OECD's two-pillar reform program, announced in October 2021, introduced a global minimum corporate tax to ensure that large multinational companies pay a minimum tax rate on profits in each country where they operate.
Eligible businesses will need to register with Bahrain’s National Bureau for Revenue, which also manages VAT and excise tax. This initiative demonstrates Bahrain’s commitment to global cooperation and aims to create a fair and level playing field in international taxation, according to the BNA.
Bahrain, the smallest economy within the six-member Gulf Cooperation Council (GCC), has been focusing on diversifying its economy away from oil dependency. As part of its broader economic reform strategy, the country introduced a major economic reform plan in 2021, aiming to invest $30 billion in strategic projects to drive post-pandemic growth, increase employment for citizens, and attract foreign direct investment. The International Monetary Fund (IMF) projects Bahrain's real GDP to grow by 3.6% in 2024.
Other Gulf countries have also introduced various taxes, such as VAT and corporate tax, as part of their economic reforms. In July, Oman’s Shura Council revealed plans for a draft law on personal income tax, potentially making Oman the first GCC country to tax personal income. The proposed law could affect high earners, with citizens taxed on global income exceeding $1 million and foreign residents taxed on Oman-sourced income above $100,000.
