GTL Summary:

Allows an election to treat investment entities as tax transparent if the owner is subject to marked-to-market taxation at or above the Minimum Rate.

Document Type: ERS - Executive Regulations
Law: DMTT Law (Decree Law No. 11 of 2024)
Decision Number: executive-regulations-172-article-60
Year: 2024
Country: 🇧🇭 Bahrain
Official Name: Article 60 - Tax Transparency Election for Investment Entities and Insurance Investment Entities
Last updated at: 2026-02-23 12:13:40 UTC

Chapter 7 - Tax Neutrality

Article 60 - Tax Transparency Election for Investment Entities and Insurance Investment Entities

  1. The Filing Constituent Entity of a Multinational Enterprise Group may make an election to treat an Investment Entity or an Insurance Investment Entity as a Tax Transparent Entity if all the following conditions are satisfied:

    1. The Constituent Entity-owner of that Investment Entity or Insurance Investment Entity is subject to tax in the jurisdiction in which it is located under a mark-to-market or similar regime based on the annual changes in the fair value of its Ownership Interest in such Entity.

    2. The tax rate applicable to the Constituent Entity-owner of that Investment Entity or Insurance Investment Entity on the annual changes in fair market value referenced in Clause 1 of this Paragraph equals to or exceeds the Minimum Rate.

  2. A Constituent Entity that indirectly owns an Ownership Interest in an Investment Entity or Insurance Investment Entity through a direct Ownership Interest in another Investment Entity or Insurance Investment Entity is considered to be subject to tax under a mark-to-market or similar regime with respect to the indirect Ownership Interest if it is subject to a mark-to market or similar regime with respect to the direct Ownership Interest.

  3. Where the election under Paragraph A of this Article is applied, the Constituent Entity Income or Loss and Substance-based Income Exclusion of an Investment Entity and an Insurance Investment Entity shall be proportionally attributed to the relevant Constituent Entity-owner respective to its share of Constituent Entity Income in that Investment Entity or Insurance Investment Entity.

  4. Where the election under Paragraph A of this Article is revoked, any gain or loss from the disposition of an asset or liability held by the Investment Entity and the Insurance Investment Entity shall be determined based on the fair market value of the assets or liabilities on the first day of the Fiscal Year the revocation is made.

  5. The election referred to in Paragraph A of this Article is a Five-Year Election which can be made in accordance with Article 20 of the Law.

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