Page 8 - ICAI UAE TAX UPDATE_September 2024

milestone in the OECD/G20’s Inclusive Framework on
BEPS 2.0 project. The Law allows Bahrain to retain the
right to tax Bahrain-sourced income and prevent foreign
governments from collecting tax on such income. It
provides rules and procedures for implementing a
Domestic Minimum Top-up Tax (DMTT) in Bahrain,
without imposing the income inclusion rule (IRR)
or undertaxed payments rule (UTPR), which would
allow taxation of non-Bahraini profits under certain
circumstances.

The DMTT will be effective for fiscal years starting on or
after 1 January 2025 and applies to MNEs operating in
Bahrain with a consolidated annual revenue exceeding
€750m in two of the last four fiscal years. The effective
tax rate is 15% and will be applicable to the financial net
accounting income, subject to certain adjustments.

Permanent and transitional safe harbours will be
available. The DMTT of constituent entities located
in Bahrain shall be reduced to zero if the MNE has
constituent entities in no more than six jurisdictions and
the sum of net book value of tangible assets does not
exceed €50m for a period of five years after the first day
of the first fiscal year when the MNE entered the scope
of the OECD Model Rules.

Filing constituent entities will be required to register
with the National Bank of Bahrain (NBR) and submit
a tax return. The DMTT will be payable in instalments,
including advance payments in 2025.

8 www.icaidubai.org

UAE TAX UPDATE NEWSLETTER ISSUE 06 - September 2024