An unofficial translation of the much-awaited Executive Regulations (ER) to the new DMTT rules in Bahrain has been released on the website of the NBR today. 

The major headlines from our quick reading of the said regulation are as follows:
1.    Permanent Establishment (PE) Definition:
  • Introduction of various PE types: Fixed Place PE, Agency PE, and Assembly PE.
2.    Transfer Pricing Regime Introduced:
  • Methodologies introduced: CUP, Resale Price, Cost Plus, TNMM, and Profit Split.
  • Requirement to maintain Local and Master Files.
3.    Constitute Entities Registration:
  • Entities meeting the revenue test of Euros 750 million for 2 of the 4 fiscal years immediately preceding January 1, 2025, to register by January 30, 2025.
  • For those meeting the revenue test at a later point in time, registration is required by April 30 of the relevant fiscal year in respect of which entities in Bahrain come within the scope of law.
4.    Advance Tax Payments:
  • Taxes to be paid quarterly within 60 days from the end of the relevant quarter.
  •  First DMTT tax payment due by August 31, 2025.
5.    Tax Payment Methods:
  •  Advance tax payments to be calculated based on either the Prior Year or Current Year method.
  •  Balance of tax due to be settled within 15 months form the end of the fiscal year.
6.    Tax Returns:
  • Tax returns must be filed for each reporting fiscal year, no later than 15 months from the fiscal year-end.
  •  Forms for tax returns to be prescribed.
7.    Documentation Requirements:
  •  Entities must maintain prescribed documents for 5 years after the fiscal year-end.
8.    Adjustments in FANIL and Covered Taxes:
  •  Adjustments for the determination of FANIL and covered taxes introduced.
9.    Exclusions:
  •  Detailed guidance on exclusions provided, except simplified computation safe harbor rules, which is to be prescribed at a later point in time through a ministerial decision.
A detailed report follows.

For assistance kindly contact:
Asrujit Mandal
Tax Partner
Tel: +968 9204 0253
Asrujit.mandal@bdo.bh

Muhammad Irfan
Manager Tax
Tel: +973 3726 1229
Muhammad.irfan@bdo.bh

Muhammad Hanzla
Assistant Manager Tax
Tel: +968 7926 1238
Muhammad.hanzla@bdo.com.om