Chapter 1 - Preliminary Provisions

Article 1 - Definitions

Words and phrases contained in this Law shall have the meanings ascribed to each of them in the Law unless the context requires otherwise:

The Kingdom	:	Kingdom of Bahrain.
The Minister	:	The Minister responsible for financial affairs.
The Bureau	:	The National Bureau for Revenue established by Decree No. 45 of 2018.
Chief Executive Officer	:	Chief Executive Officer of the National Bureau for Revenue.
Regulations	:	The Executive Regulations issued for the implementation of the provisions of this Law.
Entity	:	Any legal person or arrangement that prepares or is required to prepare separate financial accounts. The term shall not include central or local government or their administration or agencies that carry out government functions.
Constituent Entity	:	An entity within a Group or a Permanent Establishment of a Main Entity that is part of a Group. A Permanent Establishment that is considered a Constituent Entity is treated as a separate entity from the Main Entity and from any other Permanent Establishment of that Main Entity. Furthermore, an Excluded Entity shall not be considered a Constituent Entity.
Ultimate Parent Entity	:	An Entity, other than a Sovereign Wealth Fund, that owns, directly or indirectly, a controlling interest in any other Entity and that is not owned, directly or indirectly, by another Entity with a controlling interest in it, or the Main Entity of a Group consisting of an Entity that has one or more Permanent Establishments provided that the said Entity is not part of another Group.
Main Entity	:	The Entity that includes the Financial Accounting Net Income or Loss of its Permanent Establishment in its financial statements.
Group	:	A Group is defined under one of the following terms: A collection of Entities that are related through ownership or control such that the assets, liabilities, income, expenses and cash flow of those Entities: Are included in the Consolidated Financial Statements of the Ultimate Parent Entity; or Are excluded from the Consolidated Financial Statements of the Ultimate Parent Entity solely on size or materiality grounds, or on the grounds that the Entity is held for sale. An Entity that is located in one jurisdiction that has one or more Permanent Establishments located in other jurisdictions provided that the Entity is not a part of another Group described in Paragraph A above.
Multinational Enterprise Group	:	A Group that includes at least one Entity or Permanent Establishment that is not located in the jurisdiction of the Ultimate Parent Entity, provided that a Sovereign Wealth Fund shall not be treated as a part of a Multinational Enterprise Group.
Permanent Establishment	:	A Permanent Establishment takes one of the following forms: A place of business (including a deemed place of business) situated in a jurisdiction and treated as a Permanent Establishment in accordance with an applicable tax treaty in force provided that such jurisdiction taxes the income attributable to it in accordance with the provisions of Article 7 of the Model Tax Convention on Income and on Capital or equivalent provisions in a similar convention. If there is no applicable tax treaty in force, a place of business (including a deemed place of business) in respect of which a jurisdiction taxes under its domestic law the income attributable to such place of business on a net basis similar to the manner in which it taxes its own tax residents. If a jurisdiction has no corporate income tax system, a place of business (including a deemed place of business) situated in that jurisdiction that would be treated as a Permanent Establishment in accordance with the Model Tax Convention provided that such jurisdiction would have had the right to tax the income attributable to it in accordance with Article 7 of the Model Tax Convention. A place of business (or a deemed place of business) that is not already described in Paragraphs A, B, and C above, through which operations are conducted outside the jurisdiction where the Entity is located provided that such jurisdiction exempts the income attributable to such operations.
Model Tax Convention	:	Model Tax Convention on Income and Capital of the Organisation for Economic Co-operation and Development (2017): Condensed Version 2017, OECD Paris.
The Model Rules	:	The document named 'OECD (2021), Tax Challenges Arising from Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on BEPS' published in December 2021 or any subsequent versions as approved by a decision of the Minister.
Tax	:	The Tax imposed under the provisions of this Law.
Tax Due	:	The amount that is or will be due for payment to the Bureau for the Fiscal Year.
Minimum Rate	:	The minimum rate of fifteen percent (15%).
Acceptable Financial Accounting Standard	:	International Financial Reporting Standards (IFRS) and any other generally accepted accounting principles set out by the Regulation.
Authorised Financial Accounting Standard	:	A set of generally acceptable accounting principles permitted by an Authorised Accounting Body in the jurisdiction where that Entity is located.
Authorised Accounting Body	:	The body with legal authority in a jurisdiction to prescribe, establish, or accept accounting standards for financial reporting purposes.
Local Financial Accounting Standard	:	A financial accounting standard permitted or required to be used in the preparation of financial accounts under the laws of the Kingdom that is an Acceptable Financial Accounting Standard, or an Authorised Financial Accounting Standard where the latter is adjusted to prevent material competitive distortions.
Tax Return	:	The data and information specified for Tax purposes for a particular Fiscal Year, which shall be disclosed in accordance with a form prepared for such purpose by the Bureau.
Fiscal Year	:	An accounting period with respect to which the Ultimate Parent Entity of the Multinational Enterprise Group prepares its Consolidated Financial Statements, or, where no Consolidated Financial Statements are prepared, the Gregorian calendar year.
Flow-through Entity	:	An Entity to the extent it is fiscally transparent with respect to its income, expenditure, profit or loss in the jurisdiction where it was created unless it is tax resident and subject to a Covered Tax on its income or profit in another jurisdiction. A Flow-through Entity may be a tax transparent entity with respect to its income, expenditure, profit or loss to the extent that it is fiscally transparent in the jurisdiction in which its owner is located, or a Flow-through Entity is a reverse hybrid entity with respect to its income, expenditure, profit or loss to the extent that it is not fiscally transparent in the jurisdiction in which the owner is located.