The second half of 2026 has made one thing clear: economic diversification across Qatar, Bahrain, Oman and Kuwait is operating at full pace. Oman has strengthened its position as a key regional logistics corridor, Bahrain is seeing significant investment in cloud infrastructure and data centres, Qatar is progressing major North Field expansion projects and Kuwait is actively relaunching government infrastructure tenders.
However, this rapid growth is being accompanied by an increasingly complex regulatory environment. Local tax authorities — from the GTA in Qatar to the tax authorities in Oman and Bahrain — have moved from implementing rules to increasingly rigorous enforcement and audit. For companies operating across these four markets, protecting project margins now depends directly on two factors: controlling capital expenditure (CAPEX) and carefully structuring cross-border tax arrangements.
Specialists across the BDO regional network have identified three critical areas that businesses should review before the end of the current quarter.
1. Qatar and Kuwait: the cross-border payment trap — withholding tax and tax retention
Foreign subcontractors and consortiums working on infrastructure projects in Doha and Kuwait City regularly make the same mistake: international service fees, licence payments and royalties are structured incorrectly.
- In Qatar: through the Dhareeba tax system, the tax authorities have begun to scrutinise the application of reduced withholding tax (WHT) rates under double tax treaties (DTTs) where a company cannot demonstrate the genuine substance of the income recipient.
- In Kuwait: the 5% Tax Retention Rules can hold up the final payment from a government client if your company does not have the required Tax Clearance Certificate in place.
- The BDO solution: conduct an end-to-end review of all contracts with non-residents before December to help avoid cash flow disruptions around year-end.
2. Bahrain and Oman: end-to-end VAT reconciliation for infrastructure projects
Capital-intensive projects — from data centre construction in Manama to port modernisation in Salalah and Duqm — generate significant volumes of input VAT.
- With a standard VAT rate of 10% in Bahrain and 5% in Oman, tax recoveries can become critical to working capital. Tax authorities in both markets have increased scrutiny over VAT refund claims, requiring detailed evidence for individual invoices and a clear link between expenditure and taxable business activities. Technical errors in the treatment of import VAT or subcontractor invoices can result in input VAT deductions being rejected.
- The BDO solution: implement automated reconciliation systems and prepare a ‘defence file’ for the tax authority before submitting a VAT refund claim.
3. CAPEX audit: why remote management from Dubai no longer works
Many major groups operating in Oman, Qatar or Kuwait are managed from regional hubs in the UAE. Advisers appointed to audit these projects often assess risks against general corporate standards without a detailed understanding of local supply chains, port procedures or actual approval timelines with local ministries.
As a result, hidden leakage in project CAPEX may only be identified when it is already too late.
Why choose BDO?
BDO’s strong, autonomous offices with local professionals on the ground in Muscat, Doha, Manama and Kuwait City allow capital expenditure audits to be conducted ‘on the construction site’, rather than from a virtual office. We identify local risks where remote advisers may see only figures in an Excel spreadsheet.
The markets of Qatar, Bahrain, Oman and Kuwait offer significant opportunities, but they leave little room for overlooking important details. Businesses with advisers who have genuine local presence are better positioned to manage these risks.
Contact BDO Bahrain for an express review of your tax and operational risks ahead of the financial year-end.