This tax will apply to all companies with global revenues exceeding 750 million euros.
Bahrain has announced the introduction of a tax on multinational corporations’ profits from 2025, a first in the Gulf kingdom.
The measure, which will come into force on January 1, “aims to ensure that multinationals pay a minimum tax of 15% on profits generated” in the country, in line with the standards of the Organization for Economic Cooperation and Development (OECD), the Bahraini National News Agency (BNA) reported on Sunday evening.
The tax will apply to all companies with global revenues exceeding 750 million euros, reflecting “Bahrain’s commitment to promoting global economic fairness and transparency,” she added.
No corporate tax
In 2021, more than 130 countries agreed to introduce a global minimum tax rate of 15%, under the auspices of the OECD, to end the search for low rates by large companies.
A small crude producer not a member of the Organization of the Petroleum Exporting Countries (OPEC), Bahrain is seeking to diversify its sources of income, which are largely dependent on black gold, like other Gulf countries.
The United Arab Emirates, long considered a tax haven and regional headquarters for many companies, last year began taxing corporate profits of more than 375,000 dirhams (about 91,500 euros) at 9%, while Oman and Kuwait already have a 15% tax rate on foreign companies.
“The case of Bahrain is notable because the country had no corporate income tax, and is going straight to applying OECD standards,” says Justin Alexander, director of the consultancy Khalij Economics.
Manama, which is home to operations of multinationals such as Amazon Web Services, Microsoft and Pepsi, opposed such a tax a few years ago “because of concerns about its competitiveness,” the economist recalls.
But its persistent budget deficits and the standardisation of tax rules across the region have encouraged it to do so, he says.
According to the OECD, introducing a global minimum corporate tax rate would generate $220 billion (around €199 billion) in additional annual revenue for governments.
