Proposed Bahrain withholding tax on services

The situation

Summaries of the draft expect 5% WHT on royalties, interest and services paid to non-residents, with 0% on dividends and quarterly WHT returns. It is not in force.

The law

• 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

Today there is no Bahrain WHT on such payments. If the draft passes, you may need to deduct 5% and file quarterly. Review vendor contracts now for gross up clauses, and check the India Bahrain treaty position once the law is final.

What to do

1. Do not withhold today.
2. List non-resident payments.
3. Review contract tax clauses.
4. Revisit once the law is published.

Related

• Late filing penalty proposed in Bahrain CIT
• Preparing systems for 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