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 the profits generated” in the country, in line with the standards of the Organisation for Economic Co-operation and Development (OECD), the Bahraini National News Agency (BNA) said 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.
In 2021, more than 130 countries agreed to introduce a global minimum tax rate of 15%, under the aegis of the OECD, in order to put an end to 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, largely dependent on black gold, like other Gulf countries. The United Arab Emirates, long considered a tax haven and regional headquarters for many companies, began last year to tax corporate profits of more than 375,000 dirhams (around 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 goes 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. “due to concerns about its competitiveness”recalls the economist. But its persistent budget deficits and the standardization of tax rules in the region have encouraged it in this direction, he explains. According to the OECD, the introduction of a minimum corporate tax rate at the global level should generate 220 billion dollars (about 199 billion euros) of additional annual revenue for governments.
