A Guide to Corporate Taxes in Bahrain

Is There Corporate Tax in Bahrain?

Bahrain charges no general corporate income tax on most companies. Hydrocarbon profits are taxed at 46%. Large multinational groups face a 15% DMTT from fiscal years beginning 1 January 2025. A 10% VAT applies to most goods and services. Your rate depends on sector and group revenue, not on local versus foreign ownership.

Who Pays the 46% Oil and Gas Corporate Tax in Bahrain?

Any company that explores for, produces, or refines crude oil or natural hydrocarbons in Bahrain pays 46% on net profits. The rate sits in Article 2 of the Bahrain Income Tax Law under Amiri Decree No. 22 of 1979, effective 1 January 1979. It applies regardless of where the company is incorporated. This is one of the highest sector corporate rates in the GCC (Gulf Cooperation Council).

What Can Oil and Gas Companies Deduct?

Oil and gas taxpayers deduct the cost of hydrocarbons sold, operating expenses, financing costs, and depreciation or depletion of properties when computing net taxable profit, under Articles 4(a) to 4(e) of the Bahrain Income Tax Law (Ministry of Finance). Intangible costs of each exploratory well are deducted at 20% a year over five years. Excess deductions carry forward to offset income in a later year.

What Is the Domestic Minimum Top-up Tax (DMTT) in Bahrain?

The DMTT is a 15% minimum tax on the Bahrain profits of large multinational enterprise (MNE) groups, introduced by Decree-Law No. 11 of 2024 and effective for fiscal years beginning on or after 1 January 2025. It applies to groups with consolidated annual revenue of at least EUR 750 million in two of the four preceding fiscal years. Bahrain was the first GCC country to legislate a DMTT.

The NBR administers the tax, which aligns with the OECD Pillar Two GloBE (Global Anti-Base Erosion) rules. Decree-Law No. 11 of 2024 was published on 1 September 2024, and the DMTT Executive Regulations (Decision No. 172 of 2024) followed on 15 December 2024 (NBR).

How Do DMTT Registration and Advance Payments Work?

In-scope entities register with the NBR within 120 days of the start of their first in-scope fiscal year. Groups already in scope at launch, mostly December year-end filers, had an accelerated deadline of 30 January 2025. Late or incorrect registration carries a fine of up to BHD 100,000. Quarterly advance payments fall due within 60 days of each period end.

How Does VAT Work in Bahrain?

Bahrain’s standard VAT rate is 10%, in effect since 1 January 2022, doubled from the 5% rate that applied when VAT started on 1 January 2019 (per the national government portal). Registration is mandatory once annual taxable supplies exceed BHD 37,500, and voluntary from BHD 18,750. Businesses file returns through the NBR portal, monthly or quarterly by turnover.

Which Supplies Are Zero-Rated or Exempt From VAT?

Bahrain zero-rates several categories and exempts others, following the NBR VAT General Guide. Zero-rated supplies carry no VAT but keep input recovery; exempt supplies carry no VAT and no input recovery.

What Are the VAT Penalties in Bahrain?

Bahrain’s VAT penalties run from financial fines to imprisonment for evasion. Late filing or payment costs 5% to 25% of the unpaid tax. Incorrect or underreported VAT adds 2.5% to 5% a month. Failing to register on time can cost up to BHD 10,000. Evasion carries up to three times the tax due plus prison.

Does Bahrain Charge Withholding Tax on Dividends, Interest, or Royalties?

No. Bahrain levies no withholding tax (WHT) on dividends, interest, or royalties under domestic law (Ministry of Finance), which draws holding and treasury structures to the country. There is also no personal income tax. Retained earnings face no Bahrain tax, and distributions leave Bahrain untaxed at source. The tax question usually arises in the recipient’s country instead.

Is There Capital Gains Tax in Bahrain?

Companies outside the oil and gas regime pay no capital gains tax in Bahrain. Disposals of assets and shares are untaxed. Stamp duty of roughly 1.7% to 2% applies to real estate transfers, collected by the Survey and Land Registration Bureau. Because gains are untaxed, Bahrain has no rollover relief machinery for mergers and acquisitions. Route structuring specifics to a tax adviser, not a rule of thumb.

What Other Taxes Do Businesses Pay in Bahrain?

Beyond VAT and sector taxes, Bahrain businesses carry a handful of smaller levies. Excise tax hits tobacco, energy drinks, and soft drinks. Municipality tax applies to rented property. Stamp duty applies to real estate transfers. Employers pay social insurance. Bahrain has no personal income tax.

Current SIO contribution rates were reformed in phases and should be confirmed at sio.gov.bh before you budget payroll costs.

What Are the Corporate Tax Filing Requirements in Bahrain?

Who files depends on your regime. Oil and gas companies file annual corporate income tax returns with audited financial statements. In-scope MNE groups handle DMTT registration, top-up tax returns, and GloBE Information Return coordination with the NBR. Every other company files only VAT returns and social insurance. There is no general corporate income tax return in Bahrain.

What Documents Do You Need for Company Tax Filing in Bahrain?

Oil and gas filers submit audited financial statements, fixed asset registers, related-party disclosures, and reconciliations from accounting profit to taxable profit. DMTT filers add effective tax rate and GloBE computations built on the group’s consolidated accounts. Those computations follow the group’s consolidated accounting standard under the GloBE rules, not a separate Bahrain basis.

Does Bahrain Require Transfer Pricing Documentation?

Bahrain has no standalone transfer pricing documentation regime for most companies, because there is no general corporate income tax to protect. Related-party disclosures can be requested in oil and gas assessments. DMTT groups must produce GloBE computations consistent with the group’s transfer pricing. A full transfer pricing analysis still matters for your group’s other jurisdictions.

What Is the Tax Year and When Are Tax Payments Due in Bahrain?

Bahrain has no single tax year. Oil and gas companies follow their own financial year and file within six months of year-end. DMTT groups follow their group fiscal year with quarterly advance payments and a final return. VAT filers report monthly or quarterly. The table sets out each deadline.

What Tax Incentives Does Bahrain Offer Companies?

The 0% general corporate income tax is Bahrain’s headline incentive. On top of it, Bahrain allows 100% foreign ownership in most sectors, free repatriation of capital and profits, and duty-free access through the GCC customs union. Dedicated zones include the Bahrain International Investment Park, the Bahrain Logistics Zone, and airport cargo zones. The US-Bahrain Free Trade Agreement (FTA) was the first US FTA with a Gulf state.

The GCC customs union affects import duties only, with no corporate income tax or VAT consequence. For setup specifics, see our guides on starting a business in Bahrain as a foreigner and Bahrain company formation cost.

Outlook, not current law: Pillar Two erodes the value of a zero rate for in-scope multinationals, and Bahrain may shift toward Qualified Refundable Tax Credits (QRTCs) that comply with the GloBE rules.

How Does Bahrain Compare With Other GCC Countries on Corporate Tax?

Bahrain remains the lowest-tax GCC jurisdiction for most businesses: 0% general corporate income tax, a 15% DMTT only for large multinationals, 10% VAT, and no withholding tax. The UAE charges a 9% general rate, and Saudi Arabia charges 20% plus Zakat, a religious levy. For large multinationals, the DMTT pushes Bahrain, the UAE, and others to a shared 15% floor.

See our full guides to corporate tax in the UAE and corporate tax in Qatar for the detail behind these rows.

Does Bahrain Have a Double Tax Treaty Network?

Yes. Bahrain has more than 40 double tax treaties, according to the Ministry of Finance. Partners include France, the United Kingdom, China, Singapore, the Netherlands, and Luxembourg. Combined with zero withholding tax, the network suits regional holding and treasury structures. Treaties do not shield in-scope multinationals from the DMTT, which applies on top of any treaty relief.

How Are Foreign Companies Taxed in Bahrain?

Foreign and local companies face the same rates in Bahrain. The 46% oil and gas tax applies regardless of ownership. DMTT scope follows group revenue, not nationality. With no general corporate income tax, most foreign-owned companies face no income tax assessment at all, and 100% foreign ownership is permitted in most sectors.

How We Help With Corporate Tax in Bahrain

Bahrain’s four-rate system looks simple on paper and turns messy once you juggle DMTT deadlines, VAT returns, and sector rules across a group. Commenda’s corporate tax and bookkeeping platform handles Bahrain corporate tax compliance, DMTT deadline tracking, and filing coordination. For VAT registration and returns, Commenda’s indirect tax software keeps your filings on time, and Commenda’s entity management keeps every subsidiary on one standardized workflow.

Our compliance calendar tracks each deadline by country and entity, and our list of corporate compliance providers in Bahrain points you to hands-on local support.

Book a demo to get a free review of your Bahrain DMTT and VAT exposure.