MNE’s urged to assess tax compliance obligations

Multinational enterprises (MNEs) in Bahrain must register with the National Bureau for Revenue (NBR) by January 30 or within 120 days of their fiscal year-end, as the country implements a Domestic Minimum Top-Up Tax (DMTT) from the start of this year, experts said.

As part of Bahrain's commitment to global tax reform under the OECD’s Global Anti-Base Erosion (Globe) framework, the DMTT imposes a 15 per cent minimum tax rate on profits generated in Bahrain by multinational enterprises (MNEs) with global revenues exceeding 750 million euros (around $766m) in at least two of the past four fiscal years.

"This measure aims to combat tax avoidance, ensure fair taxation, and strengthen Bahrain’s competitiveness in the global economy," said Shashank Arya, director of tax at Grant Thornton Bahrain, urging MNEs to assess their compliance obligations, register promptly, and plan for advance tax payments to avoid penalties.

Jatin Karia, senior partner at Grant Thornton Bahrain, emphasized the importance of monitoring updates from the NBR on guidance and clarifications.

Jassim Abdulaal, managing partner at Grant Thornton, noted that the regulations will enhance Bahrain's standing in international tax cooperation, fostering economic growth and investment.

This timely registration facilitates effective tax administration. Furthermore, the minimum taxation principle aims to establish a global floor for effective tax rates at 15pc, preventing aggressive tax planning strategies that exploit loopholes and erode tax bases.

This approach aligns with OECD guidelines for international tax standards, promoting a level playing field and discouraging harmful tax competition. Finally, transparency is paramount, with requirements for detailed financial and tax disclosures. This enhanced transparency improves accountability and allows for better monitoring of tax obligations and cross-border tax flows.

The executive regulations also clarify key definitions, including revenue tests, transfer pricing, and exclusions for certain income and activities.