GTL Summary:

Details the methods for computing the Financial Accounting Net Income or Loss of a Constituent Entity, prioritizing Local Financial Accounting Standards or the standards used for the Ultimate Parent Entity's Consolidated Financial Statements.

Document Type: ERS - Executive Regulations
Law: DMTT Law (Decree Law No. 11 of 2024)
Decision Number: executive-regulations-172-article-8
Year: 2024
Country: 🇧🇭 Bahrain
Official Name: Article 8 - Computation of the Financial Accounting Net Income or Loss of a Constituent Entity
Last updated at: 2026-02-23 12:13:40 UTC

Chapter 4 - Accounting

Article 8 - Computation of the Financial Accounting Net Income or Loss of a Constituent Entity

  1. For the purposes of applying the provisions of Paragraph B of Article 6 of the Law, a Constituent Entity's Financial Accounting Net Income or Loss shall be determined based on financial accounts prepared in accordance with a Local Financial Accounting Standard where all of the following conditions are met:

    1. All of the Constituent Entities located in the Kingdom that are members of the same Multinational Enterprise Group have financial accounts prepared in accordance with the Local Financial Accounting Standard.

    2. The accounting period of all such accounts is the same as the Fiscal Year of the Consolidated Financial Statements of the Multinational Enterprise Group or Joint Venture Group.

    3. Either all such Constituent Entities are required to prepare or use such financial accounts for the purposes of determining their liability to taxes in the Kingdom or to comply with any other law of the Kingdom, or such financial accounts are subject to an external audit.

  2. For the purposes of Clause 2 of Paragraph A of this Article, a Joint Venture Group means any Joint Venture and its Joint Venture Subsidiaries.

  3. Where any of the Constituent Entities located in the Kingdom that are members of the same Multinational Enterprise Group do not prepare financial accounts which meet all of the requirements under Paragraph A of this Article, the Constituent Entity Income or Loss shall be determined based on Paragraph D or E of this Article as applicable.

  4. Where Paragraph C of this Article applies, the Financial Accounting Net Income or Loss of such Constituent Entity shall be the net income or loss for the Fiscal Year determined for the Constituent Entity, before making any consolidation adjustments aimed at eliminating intra-group transactions, which has been used in preparing Consolidated Financial Statements of the Ultimate Parent Entity.

  5. Where it is not reasonably practicable to determine the Financial Accounting Net Income or Loss of a Constituent Entity located in the Kingdom in accordance with Paragraph D of this Article, the Financial Accounting Net Income or Loss of the Constituent Entity may be determined using another Acceptable Financial Accounting Standard or Authorised Financial Accounting Standard provided that all of the following conditions apply:

    1. The financial accounts of the Constituent Entity are prepared based on that accounting standard.

    2. The information contained in the financial accounts is reliable.

    3. Permanent differences greater than EUR 1 million that arise from the application of the other Acceptable Financial Accounting Standard or Authorised Financial Accounting Standard are conformed to the treatment which would have applied under the financial accounting standard used in the preparation of the Consolidated Financial Statements of the Ultimate Parent Entity.

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