A new levy on multinational corporations (MNEs) was unanimously approved by Bahrain’s parliament. The National Assembly recess in 2024 allowed MPs to vote retroactively on a royal decree issued by His Majesty King Hamad regarding the Domestic Minimum Top-up Tax for MNEs Law.
According to Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa, the new law will apply to 348 multinational corporations that operate in Bahrain, with estimated yearly tax revenues of BD130 million.
He added that “encouraging stability and transparency in the tax would improve Bahrain’s economic climate and stop revenue loss.”
The government’s commitment to fiscal sustainability was emphasised by Shaikh Salman, who also stated that the tax would increase the nation’s appeal as a location for ethical foreign investment.
The minister’s response came after first deputy speaker Abdulnabi Salman asked the parliament about the expected effect of the tax on international projects doing business in the Kingdom. The minister emphasised Bahrain’s membership in the OECD Inclusive Framework, which has been in place since 2018, along with over 140 other nations, including GCC members.
“This initiative is part of global efforts to combat base erosion and profit shifting (BEPS), ensuring that profits are taxed where economic activities generating them take place,” he explained.
“By adopting the OECD’s Pillar Two Model Rules, we are taking a proactive step to uphold international tax fairness, prevent revenue leakage and maintain Bahrain’s reputation as a transparent and cooperative jurisdiction,” Shaikh Salman noted.
According to Pillar Two, large multinational corporations that operate in multiple countries and generate at least 750 million euros in revenue in at least two of the previous four years are subject to a global minimum corporate tax rate of 15%.
“Implementing this tax prevents other countries from claiming taxes on profits generated in Bahrain,” Shaikh Salman concluded.