GTL Summary:

Requires separate ETR calculations for Investment and Insurance Investment entities and specifies how to aggregate them if multiple such entities exist.

Document Type: ERS - Executive Regulations
Law: DMTT Law (Decree Law No. 11 of 2024)
Decision Number: executive-regulations-172-article-59
Year: 2024
Country: 🇧🇭 Bahrain
Official Name: Article 59 - Separate Computation for Investment Entities and Insurance Investment Entities
Last updated at: 2026-02-23 12:13:40 UTC

Chapter 7 - Tax Neutrality

Article 59 - Separate Computation for Investment Entities and Insurance Investment Entities

  1. Subject to Paragraph H of this Article, the Effective Tax Rate for an Investment Entity or Insurance Investment Entity that is a Constituent Entity located in the Kingdom shall be calculated separately from the Effective Tax Rate for other Constituent Entities located in the Kingdom.

  2. Paragraph A of this Article shall not apply in any of the following cases:

    1. The Investment Entity or Insurance Investment Entity is a Tax Transparent Entity.

    2. The Insurance Entity or Insurance Investment Entity is subject to an Election in accordance with Article 60 or Article 61 of these Regulations.

  3. For the purposes of Paragraph A of this Article, the Effective Tax Rate for each Investment Entity or Insurance Investment Entity shall be calculated in accordance with the formula :

    (A ÷ B)

    where:

    A: The Adjusted Covered Taxes of the Investment Entity or Insurance Investment Entity.

    B: The Multinational Enterprise Group's Allocable Share in the Constituent Entity Income of that Investment Entity or Insurance Investment Entity.

  4. The Adjusted Covered Taxes of an Investment Entity or Insurance Investment Entity shall be calculated in accordance with the formula :

    (C + D)

    where:

    C: The Adjusted Covered Taxes attributable to the Multinational Enterprise Group's Allocable share in the Constituent Entity Income of the Investment Entity or Insurance Investment Entity.

    D: The Covered Taxes allocated to that Investment Entity or Insurance Investment Entity as per Article 29 of these Regulations.

  5. For the purposes of applying the formula described in Paragraph D of this Article, the Adjusted Covered Taxes of an Investment Entity or Insurance Investment Entity shall not include any Covered Taxes accrued by that Entity and which are attributable to income that is not part of the Multinational Enterprise Group's Allocable Share in the Constituent Entity Income of the respective Entity.

  6. The Tax of an Investment Entity or Insurance Investment Entity that is a Constituent Entity located in the Kingdom shall be calculated in accordance with the formula :

    (E x (F - G))

    provided that the result of (F - G) is a positive amount, where:

    E: The Additional Tax Rate as computed in accordance with Article 9 of the Law.

    F: The Multinational Enterprise Group's Allocable Share in the Constituent Entity Income of the Investment Entity or Insurance Investment Entity.

    G: The Substance-based Income Exclusion of the Investment Entity or Insurance Investment Entity.

  7. Subject to Article 46 of these Regulations the Eligible Tangible Assets and the Eligible Payroll Costs for an Investment Entity or an Insurance Investment Entity that is a Constituent Entity located in the Kingdom shall be reduced in proportion to the Multinational Enterprise Group's Allocable Share in the Constituent Entity Income of that Entity for the purposes of calculating the Substance-based Income Exclusion for such Entities.

  8. Where the Multinational Enterprise Group holds Ownership Interest in more than one Investment Entity or Insurance Investment Entity that is a Constituent Entity located in the Kingdom, the Adjusted Covered Taxes, the Multinational Enterprise Group's Allocable Share of Constituent Entity Income or Loss and the Substance-based Income Exclusion as computed in the preceding Paragraphs of this Article for each Entity shall be aggregated to compute a single Effective Tax Rate and to compute one Tax amount relating to the income of such Entities.

  9. For the purposes of applying the provisions of this Article, the Multinational Enterprise Group's Allocable Share in the Constituent Entity Income of an Investment Entity or Insurance Investment Entity shall be computed in accordance with the formula :

    (H - (I + J))

    where:

    H: The Constituent Entity Income of the Investment Entity or Insurance Investment Entity.

    I: The amount of Constituent Entity Income of the Investment Entity or Insurance Investment Entity attributable to Ownership Interests held by Ownership Interests Holders not forming part of that Multinational Enterprise Group.

    J: The amount of Constituent Entity Income of the Investment Entity or Insurance Investment Entity attributable to Ownership Interests held by the Investment Entity or Insurance Investment Entity which is the subject to an Election as per Article 60 or Article 61 of these Regulations.

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