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Bahrain Introduces a Domestic Minimum Top-up Tax (DMTT) for Multinational Enterprises (MNEs) with Decree-Law No. (11) of 2024
On September 1, 2024, the Kingdom of Bahrain published the Decree-Law No. (11) of 2024 that introduced the Domestic Minimum Top-up Tax for Multinationals Enterprises (MNEs) with a global annual revenue exceeding 750 million euros. Effective January 1, 2025, such companies must register with the National Bureau for Revenue of Bahrain in accordance with the rules, conditions and controls prescribed by the Regulations (not yet published) to avoid penalties for non-compliance. According to Art. 35 of the Decree-Law No. (11) of 2024, failure to register for tax purposes will be considered as a criminal offense (Tax Evasion) punishable by imprisonment for a period of no less than three months and not exceeding five years, and by a fine of no less than the amount of the tax due and not exceeding three times its value, or by one of the two punishments.
The introduction of the DMTT aligns with Bahrain's commitment to the Organization for Economic Co-operation and Development (OECD)’s comprehensive framework and its global two-pillar tax reform initiative (Pillar 2); endorsed by the Gulf Cooperation Council and over 140 other countries.
It should be noted that Bahrain, as the only GCC state, has not yet introduced the regular corporate tax on the profits of companies based there. But Bahrain is now the first GCC State to announce the introduction of the DMTT in line with Pillar 2. This unique step can be interpreted to mean that non-large multinational companies will continue to not pay corporate tax on their profits earned in Bahrain for a while longer. It will be very interesting to see how long this situation will remain unchanged.
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