What is the Domestic Minimum Top-up Tax (DMTT) in Bahrain ?
Bahrain Implements OECD Domestic Minimum Top-Up Tax to Boost International Tax Compliance
In 2018, Bahrain joined the OECD Inclusive Framework and endorsed its two-pillar global tax reform initiative. This landmark agreement, supported by over 140 jurisdictions worldwide, including GCC countries, aims to ensure a fair and transparent international tax system. As part of this reform, the OECD introduced the Domestic Minimum Top-Up Tax (DMTT), requiring large multinational enterprises (MNEs) to pay a minimum tax rate of 15% on profits in every country they operate.
The Kingdom of Bahrain has enacted the DMTT under Decree Law No. (11) of 2024, applying to MNEs with annual global revenues exceeding EUR 750 million. Designed in alignment with the OECD’s Pillar Two framework, this law will come into effect on January 1, 2025, marking a significant milestone in Bahrain’s commitment to global tax cooperation.
The implementation of the DMTT reflects Bahrain’s dedication to fostering a level playing field in international taxation while ensuring that MNEs pay their fair share of taxes on profits generated within the Kingdom. This initiative positions Bahrain as a proactive participant in global economic reforms, promoting transparency, equity, and compliance in international tax practices.
Optimize your compliance strategy with Bahrain’s new DMTT regulations starting in 2025.
Domestic Minimum Top-up Tax payer charter
The National Bureau for Revenue (NBR) charter outlines the responsibilities of the NBR and the obligations of registered Domestic Minimum Top-up Tax (DMTT) payers. It aims to establish a foundation of mutual trust, transparency, and compliance, ensuring smooth tax management for all parties involved.
Registered DMTT payer rights
To be approached in a professional, efficient and fair manner
The National Bureau for Revenue (NBR) is committed to treating you with respect, professionalism, and fairness in every interaction.
If you are ever dissatisfied with NBR services, it is recommended to first address the matter directly with the relevant NBR representative for a prompt resolution. Additionally, NBR encourages you to submit queries or concerns through its official channels. Every submission is taken seriously, thoroughly reviewed, and responded to as quickly as possible, ensuring a seamless and efficient service experience.
To be considered a truthful individual/ person
NBR would presume that:
- You are providing complete and accurate information
- You pay any DMTT you owe
To be provided with readiness information
The National Bureau for Revenue (NBR) is committed to providing comprehensive Domestic Minimum Top-up Tax (DMTT) information through its official website, communication channels, and direct engagement with businesses. This approach ensures businesses are well-prepared and supported in achieving full compliance with DMTT regulations.
To be offered data protection
The National Bureau for Revenue (NBR) is dedicated to safeguarding the information you provide, ensuring it is securely stored and protected. NBR strictly shares data with other organizations only when permitted by law, prioritizing your privacy and compliance with regulatory standards.
Registered DMTT payer duties
To comply with all DMTT obligations
It is essential for Domestic Minimum Top-up Tax (DMTT) payers to:
- Complete DMTT registration within the deadlines outlined in the Executive Regulations.
- Submit accurate documentation and information, including DMTT returns, within the specified timeframes.
- Ensure the timely payment of DMTT, including advance payments, in accordance with the deadlines set in the Executive Regulations.
To keep accurate records and protect them
DMTT payers should maintain accurate records that support all submissions and information shared with the National Bureau for Revenue (NBR). It is crucial to immediately notify the NBR if a DMTT payer believes that their NBR online portal identification details have been compromised or accessed by unauthorized individuals.
DMTT FAQ's
Pillar Two, part of the Organization for Economic Cooperation and Development (OECD) Inclusive Framework, introduces the Global Anti-Base Erosion (GloBE) rules. These global rules aim to prevent corporate profit shifting and are a key component of the OECD's global tax reform. The GloBE rules ensure that Multinational Enterprises (MNEs) pay a minimum global tax rate of 15% on their profits in each jurisdiction they operate, regardless of the location of their Ultimate Parent Entity (UPE). Pillar Two applies only to MNEs with annual global revenues exceeding EUR 750 million in at least two of the last four years.
The Kingdom of Bahrain will implement a Domestic Minimum Top-up Tax (DMTT) on Multinational Enterprises (MNEs) to ensure that all applicable income is taxed at the global minimum rate of 15%, with the tax collected within Bahrain. This initiative aligns with global tax reforms aimed at ensuring fair taxation for MNEs operating in the Kingdom.
Multinational Enterprises are entities that operate in their home jurisdiction and other countries through constituent entities, such as foreign subsidiaries, branches, or other forms of presence.
DMTT will be imposed on MNEs with global annual revenues above EUR 750 million in two of last four years.
The Kingdom of Bahrain, a member of the OECD Inclusive Framework since 2018 and a signatory of the 2021 Outcome Statement on the two-pillar solution, is committed to adhering to the Base Erosion and Profit Shifting (BEPS) minimum standards. This two-pillar framework aims to combat BEPS by multinational enterprises (MNEs) and establish a coordinated approach across countries, ensuring that MNEs pay a minimum level of tax on their profits in each jurisdiction where they operate.
DMTT will become effective in the Kingdom of Bahrain for fiscal years starting on or after January 1, 2025.
The law can be accessed through the DMTT page under the Rules and Regulations.
An eligible MNE should contact NBR through their Relationship Manager (RM) or through the email MNE@nbr.gov.bh to learn more about DMTT.
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