GTL Summary:

Article 7 defines 'Covered Taxes' and the process for determining 'Adjusted Covered Taxes' for MNEs operating in Bahrain. Covered Taxes include those recorded in financial accounts regarding profits or income, as well as taxes imposed in lieu of corporate income tax. Pursuant to Paragraph B, Adjusted Covered Taxes are calculated based on the current tax expense accrued in the entity's financial accounting net income. The Executive Regulations will further detail specific exclusions and allocation rules. These provisions are designed to align with the OECD Pillar Two framework, ensuring that only eligible taxes are considered when determining the effective tax rate for DMTT purposes.

Document Type: Tax Law Article
Law: DMTT Law (Decree Law No. 11 of 2024)
Article Number: 7
Country: 🇧🇭 Bahrain
Location: Chapter 2 - Scope and Imposition of the Tax
Order: 7
Last updated at: 2026-02-23 12:13:40 UTC

Chapter 2 - Scope and Imposition of the Tax

Article 7 - Covered Taxes and Adjusted Covered Taxes

  1. The Covered Taxes of a Constituent Entity shall include:

    1. Taxes recorded in the financial accounts of a Constituent Entity with respect to its income or profits, or its share of the income or profits of a Constituent Entity in which it owns an ownership interest.

    2. Taxes imposed in lieu of a generally applicable corporate income tax.

  2. The Adjusted Covered Taxes of a Constituent Entity for a Fiscal Year shall be equal to the current tax expense for that Fiscal Year, accrued in its Financial Accounting Net Income or Loss considered as Covered Taxes as set out in the Regulations.

  3. The Regulations shall prescribe the rules, conditions, and criteria necessary for the application of the provisions of this Article, including matters related to the determination of taxes which are considered to be Covered Taxes, the rules for the allocation of Covered Taxes, and the adjustments necessary for the computation of Adjusted Covered Taxes. The Regulations shall also specify taxes which are not considered to be Covered Taxes for purposes of computation of Tax, 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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Article 6 - Computation of Constituent Entity Income or Loss
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Article 8 - Computation of the Effective Tax Rate
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