Preparing systems for Bahrain CIT

The situation

The draft expects annual returns for 12 month periods and quarterly WHT returns, with details in future regulations.

The law

• Draft Corporate Income Tax Law (not yet enacted): Proposed 10% tax on taxable income above BHD 200,000 for residents with revenue over BHD 1 million or taxable income over BHD 200,000, expected from 1 January 2027
• Draft CIT Law: withholding tax (proposed): Expected 5% WHT on royalties, interest and services paid to non-residents, 0% on dividends, with quarterly WHT returns; not in force

What it means for you

Useful no regret steps: tag non-resident payments by type, keep revenue by service line, tidy intercompany agreements, and align the financial year. These help with VAT and DMTT too. Avoid large spend until the law is final.

What to do

1. Tag vendor payments by type.
2. Clean intercompany agreements.
3. Confirm the financial year.
4. Review once the law is published.

Related

• Late filing penalty proposed in Bahrain CIT
• Draft CIT and DMTT together
• Oil and gas companies under the Bahrain draft
• Is Bahrain corporate income tax in force
• Small business and nil CIT returns
• Who would pay the proposed Bahrain CIT