Bahrain: local rules

Bahrain has no general corporate income tax today. The only income tax is the 46% tax on oil and gas companies under Decree-Law 22 of 1979 (art. 2). It applies to any entity that explores for or produces crude oil or natural hydrocarbons in Bahrain for its own account, or refines crude oil in its own Bahrain facilities. A second tax, the Domestic Minimum Top-up Tax (DMTT), is charged at 15% on large multinational groups under Decree-Law 11 of 2024 for fiscal years that begin on or after 1 January 2025. The DMTT is run by the NBR under Executive Regulations issued by Decision 172 of 2024. A draft broad-based 10% corporate income tax law, planned for fiscal years from 1 January 2027, was reported in 2026 but was not found to be enacted as of 27 October 2026. Arm's length pricing is not a general rule for Bahraini taxpayers. It applies inside the DMTT: a Bahrain constituent entity must adjust its accounts so that deals with group members in other jurisdictions match arm's length terms (Executive Regulations art. 13(a)). Deals between two Bahrain entities are covered only for a loss on a sale or transfer of an asset. The NBR's DMTT Transfer Pricing Guide (June 2026) follows the OECD Guidelines and is guidance, not law.

Bahrain entities that deal with other group members must prepare and keep a local file and a master file in the form the NBR sets (Executive Regulations art. 13(e)). Art. 13(f) lists what the local file must hold, such as the entity's business and strategy, each controlled deal, a comparability and functional analysis, and the group's central financing details. The Regulations and NBR guides give no filing date and no value threshold. The files are kept and given to the NBR on request. Nothing is filed with the DMTT return. Records must be kept for five years after the fiscal year, and ten years for real estate and capital assets, and the NBR can ask for up to five more years (Administrative Guide 10.2). There is no separate transfer pricing disclosure form. These duties are tied to groups in scope of the DMTT, because the Regulations are made under the DMTT Law.

The Executive Regulations (art. 13(b)) approve the five OECD methods: comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split. The most appropriate method for the facts must be used, in a way that follows the OECD Transfer Pricing Guidelines. No single method has priority, and only one method is needed. The NBR's guide prefers the CUP method where a reliable comparable exists. An agreed bilateral or multilateral advance pricing agreement is followed when it exists (art. 13(c)). Any loss on a sale or transfer of an asset between Bahrain group entities is also adjusted to arm's length (art. 13(d)).

The DMTT Law (art. 28) lets the NBR fine: failure to register up to BHD 100,000; a missing or late return up to 30% of the tax that should have been declared; late payment 1% of the unpaid tax for each month or part of a month, capped at 70%; an understated return up to 30% (20% if corrected voluntarily); other wrong data up to BHD 1,000; and obstruction, missing records, failing to give documents or other breaches up to BHD 50,000. The NBR can also assess the tax itself if a return is missing. Tax evasion, which includes not registering, not filing or paying on time on purpose and not keeping records, is a crime with 3 months to 5 years in prison and a fine of one to three times the tax (art. 35), and a company can be fined up to twice the maximum. No separate fine was found for a missing local file or master file beyond the general rules in art. 28(B). The oil and gas tax adds 1% of the amount for each 30 days of late filing or payment (Decree-Law 22 of 1979, art. 8).

Bahrain has a 15% Domestic Minimum Top-up Tax for fiscal years beginning on or after 1 January 2025, for groups with EUR 750m or more of revenue in two of the four preceding years (Law art. 3). One Filing Constituent Entity does everything. It registers within 120 days of the first day of the group's first in-scope year (the Transition Year), or by 30 January 2025 for groups already in scope on 1 January 2025 (Regulations art. 62). It pays advance tax within 60 days after each three-month period, and in the Transition Year the first payment is paid with the second (art. 70). The DMTT Tax Return, with the Revenue Test Notification and the Information Schedule (GloBE Information Return), is due 15 months after the fiscal year end (art. 66 and 67), and so is any balance of tax (art. 70). The Information Schedule can be filed abroad under a qualifying competent authority agreement, and must be filed locally if the NBR has not received it 3 months after the return deadline. First-year rule: NBR's Return Filing Manual v1.1 (August 2026, section 4.1) gives 18 months for filing and notifications in the Transition Year, so 30 June 2027 for a 31 December 2025 year end instead of 31 March 2027. That 18 months is in the NBR manual and portal, not in the Law or Regulations, so the tool shows the 15 month legal date and shows the 18 month date only when extended due dates are on. The payment date stays at 15 months. A date on a holiday or weekend moves to the next working day.

Country-by-country reporting is set by Ministry of Industry and Commerce Resolution 28 of 2021 (Official Gazette 3509, 4 February 2021). It applies to groups with consolidated revenue of BHD 342m or more in the year before the reporting year, for fiscal years starting on or after 1 January 2021. Every Bahrain constituent entity must tell the Ministry, by the last day of the reporting fiscal year, whether it is the ultimate parent and, if not, who the reporting entity is and where it is resident (art. 3). The ultimate parent resident in Bahrain files the report within 12 months of the last day of the reporting fiscal year (art. 4). Filing is through the NBR's ITIES portal, and notifications go to the Ministry (es@moic.gov.bh). A foreign group's Bahrain subsidiary has no report duty. The weekend is Friday and Saturday. The DMTT holiday and weekend rule does not clearly cover CbC, so CbC dates are not moved. Decree-Law 22 of 1979 also needs an estimated oil and gas tax return by the 15th day of the third month of the tax year, paid in 12 monthly instalments, and a final return, with no date set in the Law for the final return. The tool does not model that oil and gas return.