Corporate Tax · Bahrain
Corporate tax is coming to Bahrain. Get ready on your terms.
Bahrain has proposed a 10% corporate income tax, expected from 2027. For a market that has long been largely tax-free, this is a significant shift. SRR helps businesses understand the impact early and prepare, so compliance is straightforward when the rules take effect.
The short answer
Does Bahrain have corporate income tax?
Bahrain has no general corporate income tax today. A 46% tax applies to oil and gas activities, and a Domestic Minimum Top-up Tax has applied to large multinational groups since 1 January 2025. Beyond those, a 10% corporate income tax is proposed from 1 January 2027. A business falls in scope where annual revenue exceeds BHD 1 million or net annual profit exceeds BHD 200,000, and the 10% is charged only on taxable income above BHD 200,000.
The two thresholds do different jobs, which is where businesses get caught out. A company with revenue above BHD 1 million but profit below BHD 200,000 would be in scope and expected to register and file, while owing no tax at all. These figures come from the draft law referred to Bahrain's legislative authorities in late 2025, which a parliamentary committee placed under further scrutiny in May 2026, so the position should be checked against the final law.
Source: Draft corporate income tax law, Kingdom of Bahrain. Checked 29 July 2026.
- Proposed rate
- 10%
- A 10% corporate income tax is proposed on taxable income above the threshold, with 0% applying up to it.
- Tax-free threshold
- BHD 200,000
- Taxable income up to BHD 200,000 is proposed to be taxed at 0%, with 10% applying above that level.
- Revenue scope test
- BHD 1 million
- Annual revenue above BHD 1 million brings a business into scope even if its profit stays below the taxable threshold.
- Expected from
- 2027
- The tax is expected to take effect for fiscal years beginning on or after 1 January 2027, subject to the final law.
How We Help
From understanding the impact to filing the first return.
Corporate tax readiness is not a single task. We work through the impact, the numbers, and the systems, so the transition is managed rather than rushed.
- Corporate tax impact assessment for your business
- Taxable income and effective tax rate modelling
- Group and DMTT interaction review for multinationals
- Registration and filing readiness
- Accounting systems and record-keeping alignment for CIT
- Ongoing corporate tax compliance once the law is in force
Who It Is For
Who needs to be paying attention.
You are comfortably above the threshold
Profits well above BHD 200,000 mean a real cash tax cost from 2027. The sooner you model it, the more room you have to plan.
You are already in scope of the DMTT
Large multinational groups already face the global minimum tax. Corporate tax changes how that calculation works, and the two need to be looked at together.
You are not sure if it affects you
A quick, honest assessment is often all that is needed. Knowing you are out of scope is worth as much as knowing you are in it.
You are restructuring or expanding
Decisions made now, about entities, financing, and where profit sits, will be taxed under the new rules. It is cheaper to factor that in than to unwind it.
How It Works
A clear path to corporate tax readiness.
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Assess your exposure
We review your structure, activities, and numbers to see whether and how the proposed corporate tax would apply to your business.
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Model the impact
We estimate your taxable income and effective rate, including how the tax would interact with the DMTT for groups already in its scope.
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Get ready
We align your records, systems, and processes so that registration and filing are straightforward when the rules take effect.
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Stay compliant
Once corporate tax is in force, we handle registration, returns, and the ongoing obligations, with the same team that knows your business.
What Goes Wrong
The assumptions that will catch businesses out.
Bahrain has been a low-tax jurisdiction for a long time. That is exactly why this shift will take some businesses by surprise.
Assuming Bahrain is still tax-free
It has been, for most businesses, for a long time. That is the assumption baked into a lot of structures and forecasts, and it is about to stop being true.
Waiting for the final law
The direction of travel is clear even if the detail is not. The businesses that struggle in 2027 will be the ones that started in 2027.
Confusing corporate tax with the DMTT
They are different regimes with different scopes. The DMTT already applies to very large multinational groups. Corporate tax is proposed to apply far more broadly.
Assuming below the threshold means nothing to do
The draft indicates that businesses below the relevant thresholds may still be required to register and file. Being untaxed is not the same as being unaffected.
Common Questions
Corporate tax in Bahrain, answered.
Is there corporate tax in Bahrain now?
Bahrain has no general corporate income tax at present. A 46% tax applies to oil and gas activities, and a Domestic Minimum Top-up Tax (DMTT) has applied to large multinational groups since 1 January 2025. Beyond these, a broad-based 10% corporate income tax is proposed and expected from 2027.
What is the proposed rate and threshold?
The draft law proposes a 10% corporate income tax on taxable income exceeding BHD 200,000, with a 0% rate applying to taxable income up to that threshold. The detailed rules will be set out in the final law and its regulations.
When is corporate tax expected to take effect?
It is expected to apply for fiscal years beginning on or after 1 January 2027. The law was referred to the legislative authorities in late 2025 and remains draft, so the timing and detail should be confirmed against the final law.
Which businesses will it apply to?
As proposed, it would apply to companies and individuals carrying on business activities in Bahrain, and to non-residents operating through a permanent establishment. Passive investment income is not expected to be treated as taxable income, and oil and gas activities remain under their own regime.
How does corporate tax interact with the DMTT?
The DMTT already applies to multinational groups with consolidated revenue above 750 million euros, ensuring a 15% minimum effective rate. For groups in scope, corporate tax is expected to be calculated first, with the DMTT applying on top only where the effective rate remains below the 15% minimum.
Will small businesses have to pay corporate tax?
Under the draft, taxable income up to BHD 200,000 is taxed at 0%, with 10% applying above that. So a smaller business may end up with no tax to pay. Note, though, that the draft indicates businesses below the relevant thresholds may still be required to register and file, so being untaxed is not the same as having no obligation.
Can tax losses be carried forward?
The draft provides for tax losses to be carried forward and utilised, capped at 50% of the taxable income of the future period. Losses within a tax group may also be used to reduce another member’s taxable income. The detailed rules will be confirmed in the final law and its regulations.
What should we actually do now, before the law is final?
Three things: work out whether you are in scope, model what the tax would cost you on current numbers, and make sure your records and systems can actually produce a tax computation. None of that depends on the final wording, and all of it takes time.
Should we wait until the law is final before doing anything?
Waiting is the more expensive option. Understanding your exposure now, and getting records and systems ready, means registration and filing are straightforward when the rules take effect, rather than a rushed exercise later.
Part of our wider accounting and compliance services in Bahrain and the GCC. For groups already in scope of the global minimum tax, see our note on the Bahrain DMTT computations guide, and our guide to the proposed 2027 corporate income tax. Related obligations include economic substance (ESR) advisory, and the starting point for any tax computation is financial statement preparation.
Get ahead of corporate tax in Bahrain.
A short call is the quickest way to understand how the proposed corporate tax would affect your business and what to do now.