GTL Summary:

Article 13 establishes a Transitional Country-by-Country Reporting (CbCR) Safe Harbour for fiscal years beginning on or before 31 December 2026. Under this Article, the tax due is deemed zero if the MNE Group meets specific revenue or profit thresholds in the Kingdom, or if its alternative Effective Tax Rate meets the required percentages (16% for 2025; 17% for 2026). This safe harbour also applies if profits are less than the Substance-based Income Exclusion. However, it explicitly excludes stateless entities and groups involved in hybrid arbitrage. This measure facilitates a smoother transition for MNEs into the Pillar Two global minimum tax regime.

Document Type: Tax Law Article
Law: DMTT Law (Decree Law No. 11 of 2024)
Article Number: 13
Country: 🇧🇭 Bahrain
Location: Chapter 3 - Effective Tax Rate and Safe Harbour
Order: 13
Last updated at: 2026-02-23 12:13:40 UTC

Chapter 3 - Effective Tax Rate and Safe Harbour

Article 13 - Transitional Country-by-Country Reporting Safe Harbor

  1. For any Fiscal Year beginning on or before 31 December 2026 but not including a Fiscal Year ending after 30 June 2028, Tax shall be deemed to be zero where, with respect to the Fiscal Year concerned, any of the following conditions are met:

    1. On the country-by-country report for the Fiscal Year in respect of the Multinational Enterprise Group, the following conditions are met:

      1. The total revenue of the Constituent Entities located in the Kingdom which belong to the same Multinational Enterprise Group amounts to less than ten million Euro (EUR 10 million).

      2. The total profit or loss before income tax for those Constituent Entities is less than one million Euro (EUR 1 million).

    2. An alternative Effective Tax Rate of the Multinational Enterprise Group for that Fiscal Year is equal to or greater than 16% for Fiscal Years beginning in 2025 and 17% for Fiscal Years beginning in 2026.

    3. The Multinational Enterprise Group's profit or loss before income tax in the Kingdom shown on the country-by-country report for the Fiscal Year is equal to or less than the Substance-based Income Exclusion amount as per Article 10 of this Law.

  2. This Article shall not apply to:

    1. A Stateless Constituent Entity.

    2. A multi-parented Multinational Enterprise Group which does not report the information of the combined Groups in a single country-by-country report.

    3. A Constituent Entity that has entered into a hybrid arbitrage arrangement after 15 December 2022.

  3. This Article shall apply to Joint Ventures and Joint Venture Subsidiaries taking into consideration the following:

    1. References to Constituent Entities are considered to include Joint Ventures and Joint Venture Subsidiaries as the case may be.

    2. The financial statements are used to determine whether the conditions in Paragraph A are met, rather than a country-by-country report.

  4. The Regulations shall prescribe the rules, conditions and controls necessary for the application of the provisions of this Article, including the requirements for the financial statements of Joint Ventures and Joint Venture Subsidiaries, in addition to other necessary related matters, in a manner consistent with the Model Rules, administrative guidance, and commentary issued by the Organisation for Economic Co-operation and Development (OECD).

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