Tax in Bahrain

01Corporate income tax on ordinary profit

Bahrain has no corporate income tax on ordinary commercial profit. This covers banks, services, trading, manufacturing and technology firms.

• Bahrain levies no tax on capital gains or estates outside oil and gas.

02Oil and gas tax

Net profit from oil and gas operations, extraction or refining is taxed at 46%. It applies whatever the residence of the taxpayer.

• The tax year of an oil and gas taxpayer is the calendar year unless its articles set another year.

03Domestic minimum top-up tax

A domestic minimum top-up tax (DMTT) tops Bahraini income up to a 15% effective rate for Bahraini entities of large groups. It applies to financial years starting on or after 1 January 2025.

• Law: Decree-Law 11 of 2024, published on 1 September 2024.
• Who: Bahrain-based entities of groups with consolidated revenue of at least EUR 750 million in at least two of the four preceding financial years. The group must have entities in more than one jurisdiction.
• Rate and base: the tax tops Bahrain income up to a 15% effective rate. The base is accounting income with adjustments. A substance-based income exclusion reduces the base by a return on tangible assets and payroll.
• Excluded entities: government bodies, international organisations, non-profits, pension funds and certain investment funds and real estate vehicles that are ultimate parents.
• De minimis exclusion: average Bahrain revenue below EUR 10 million and average income below EUR 1 million or a loss.
• Initial phase exclusion: up to five years for groups with no more than six jurisdictions and tangible assets outside the largest jurisdiction of no more than EUR 50 million.
• Qualified status: the OECD lists the Bahraini DMTT as a qualified domestic minimum top-up tax meeting the safe harbour standard from 1 January 2025.
• Scope: the law has no income inclusion rule and no undertaxed profits rule. It taxes only profit earned in Bahrain.
• Safe harbours: a transitional country-by-country reporting safe harbour applies to financial years beginning on or before 31 December 2026. The simplified effective rate test is 16% for 2025 and 17% for 2026. A permanent simplified computation safe harbour also exists.

Administration and penalties

• One filing entity registers, files and pays for the group. Advance payments are made during the year.
• The National Bureau for Revenue (NBR) publishes a scope guide, registration manual, procedural guide, advance payment manual, computation guide (141 pages), return filing manual and a transfer pricing guide.
• DMTT collections for 2025 were BHD 103.962 million.
• Penalties are up to BHD 100,000 for failing to register or registering wrongly and up to BHD 50,000 for other compliance failures. Late payment costs 1% of the unpaid tax a month, capped at 70%.

04Withholding tax

Bahrain has no withholding tax on dividends, interest or royalties paid to foreign companies. This applies to all payers and recipients.

05Personal income tax

Bahrain has no personal income tax and no wealth tax.

06VAT

VAT is 10% from 1 January 2022. It started on 1 January 2019 at 5% under the GCC VAT Agreement.

• Decree-Law 48 of 2018 sets VAT. Law 33 of 2021 amended it and moved the standard rate to 10%.
• A 0% rate and exemptions apply to listed supplies.
• The NBR administers VAT.

Registration

• Residents: registration is mandatory at BHD 37,500 of annual supplies in Bahrain. The application is due within 30 days of the last day of the month in which annual supplies exceed the threshold. Where supplies are expected to exceed the threshold, the application is due 30 days before the month in which they are expected to exceed it.
• Late registration: the NBR registers the person automatically from the date the threshold was reached. The person accounts for all VAT due on supplies and imports made before registration.
• Voluntary registration: open from BHD 18,750 of taxable supplies.
• Non-residents: there is no threshold. A non-established business registers within 30 days of its first taxable supply in Bahrain where no one else is liable to account for the VAT.
• Tax representative: a non-established business registers directly or through a Bahrain-resident tax representative approved by the NBR. The representative is jointly liable for the VAT.

Reverse charge

• The reverse charge applies by default to goods and services subject to Bahrain VAT that a VAT-registered person in Bahrain buys from a supplier not resident in Bahrain. The customer declares the VAT on its return. The non-resident supplier does not register for that supply.
• The reverse charge does not apply where the customer is not VAT-registered. The supply then falls under the general rule that the supplier is liable.
• The customer can claim the reverse-charged VAT as input VAT under the normal rules.
• A domestic reverse charge needs NBR approval. The applicant is VAT-registered, shows that intra-GCC supplies and exports exceed 50% of its total supplies, and gives reasonable grounds for a recurring net refundable VAT position.

Rates and scope

• Standard rate: 10%.
• Zero-rated supplies (Decree-Law 48 of 2018, Article 53): export of goods outside the GCC, supply of goods to or under a customs duty suspension regime, and services from a taxable supplier resident in Bahrain to a customer not resident in the GCC who benefits from the service outside the GCC.
• Zero-rated, transport: transport of passengers and goods from, to or through Bahrain, and local transport. Local transport excludes rental of a vehicle without a driver, sightseeing and leisure transport, food delivery by a food supplier, transport ancillary to a standard-rated supply and transport by an unlicensed supplier.
• Zero-rated, other: food on the list of basic food items, medicines and medical equipment on the NBR list, preventive and basic healthcare services, education from kindergarten to higher education, construction of new buildings, oil, oil derivatives and gas, investment gold, silver and platinum of at least 99% purity, and pearls and precious stones.
• Exempt supplies: the sale, lease or licence of real estate, whether residential, commercial or bare land, and financial services not charged for by an explicit fee, commission, discount or rebate. Interest on loans, life insurance and life reinsurance contracts, and the transfer of equity and debt securities are exempt. Hotel accommodation, rental of function rooms and general insurance are not exempt.
• Input VAT: deductible on costs used for taxable and zero-rated supplies. Not deductible on costs used for exempt supplies.

Returns and filing periods

• VAT periods are monthly for annual supplies above BHD 3 million and quarterly for annual supplies not exceeding BHD 3 million.
• Quarterly periods end on 31 March, 30 June, 30 September and 31 December unless the NBR notifies another quarterly period.
• A person with annual supplies not exceeding BHD 3 million can ask the NBR for monthly periods. The NBR notifies the effective date if it accepts.
• The NBR can change a VAT period and gives at least three months' notice.
• Returns and payment are due by the last day of the month after the end of the period. Filing is online through the NBR portal.
• A return is filed for each period, including a period with no transactions.
• If a return is not filed in time, the NBR can estimate the VAT for the period.

Penalties

• Late filing or late payment, within 60 days: an administrative fine of 5% to 25% of the VAT that was due to be declared or paid.
• Late registration: a fine of up to BHD 10,000 where the person does not register within 60 days after the end of the registration period.
• False data on imports or supplies: a fine of 2.5% to 5% of the unpaid VAT for each month or part of a month in which the VAT is unpaid.
• Other breaches: a fine of up to BHD 5,000 for each of the following. Obstructing NBR staff, failing to notify changes to registration or return data, failing to show prices inclusive of VAT, failing to give information the NBR requests, failing to meet VAT invoice conditions and breaching any other provision of the law or regulations.
• Beyond 60 days: failing to register, file or pay more than 60 days late is treated as tax evasion. For a natural person the penalty is imprisonment of three to five years and a fine of at least the VAT due and up to three times that amount.
• A person can object to a fine before the VAT Appeals Review Committee.

07Excise tax

Excise tax is 100% on tobacco and energy drinks and 50% on carbonated and soft drinks. Decree-Law 40 of 2017 applies from 30 December 2017.

08Customs duty

Bahrain charges customs duty of 5% on the CIF value of most imports. The rate follows the GCC common external tariff.

• Alcohol carries 225% and cigarettes 200%.
• Certain goods such as paper and aluminium products carry 20%.
• Duty is charged at first entry into the GCC customs union. Goods then move freely inside it.
• Bahrain applies import VAT at 10%.
• Goods in the free zones are not charged duty while inside the zone.

09Stamp duty and property charges

Stamp duty is 2% on real estate transfers and registration. It is 1.7% if paid within two months.

• Stamp duty is the only transaction tax on property.
• Bahrain levies a municipality tax of 10% on rent of commercial and residential property to expatriates. The owner pays it.
• Real estate supplies are exempt from VAT.

10Tax treaties with Norway, Sweden, Finland and Denmark

Bahrain has a tax information exchange agreement with each of the four states. It has no double tax treaty and no bilateral investment treaty with any of them.

What the agreements cover

• Each agreement lets the tax authorities exchange information on request. None relieves any tax.
• No double tax treaty is in force with any of the four, so no treaty rates apply. Bahrain levies no withholding tax on dividends, interest or royalties.
• Bahrain ratified the four agreements by law on 10 May 2012 for Norway, Sweden and Finland (Laws 26, 25 and 22 of 2012) and on 12 July 2012 for Denmark (Law 32 of 2012).
• The NBR list of Bahrain's tax treaties shows Norway, Sweden, Finland and Denmark under information exchange agreements and not under double tax agreements.
• Bahrain's gazette list of treaties with each state shows only the information agreement.
• The Danish Tax Agency guidance on Denmark's double tax conventions and international agreements covers Bahrain only through the information exchange agreement.
• The Swedish government bill on the agreement with Bahrain concerns an information exchange agreement. It does not refer to a double tax treaty.
• Norway classes Bahrain as an information agreement partner and not as a double tax treaty partner.
• Finland's list of treaties in force, updated 1 September 2026, does not include Bahrain.
• Bahrain's bilateral investment treaty list at UNCTAD has 42 entries and none with Norway, Sweden, Finland or Denmark.

EFTA-GCC free trade agreement

• The agreement covers Norway for trade in goods, services and government procurement.
• EFTA signed it on 22 June 2009 and it entered into force on 1 July 2014.
• It covers industrial goods, fish and other marine products and processed agricultural goods. It also has chapters on services and government procurement.
• Basic agricultural products fall under separate bilateral agreements.