Wednesday, November 06, 2024
Business

Domestic Minimum Top-up Tax (DMTT) to be Implemented from January 1

by BTM

Sat, 05 October 2024

Domestic Minimum Top-up Tax (DMTT) to be Implemented from January 1

A specialist with over 25 years of experience in Tax & Legal services at PwC Middle East, Richard Bregonje, has stated that the Kingdom of Bahrain’s decision to implement a Domestic Minimum Top-up Tax (DMTT) at a rate of 15 percent on profits earned by Bahraini members of MNE groups sets a pioneering precedent within the GCC region, potentially serving as a model for neighbouring countries.

“This tax will not impact domestic Bahraini companies that are not part of Multinational Enterprises (MNE) groups, and the revenues generated could be utilised to improve public services, advance infrastructure development, and support major projects,” explains Mr. Bregonje.  

“Bahrain’s decision to impose DMTT is a crucial step in the right direction, aligning with the government’s policies and the economic recovery plans outlined in Bahrain’s Economic Vision 2030. The decision also represents an important shift towards reducing reliance on oil revenues, supporting economic stability and financial balance, especially given the volatility in today’s global oil market,” he adds. 

PwC Middle East Senior Associate – Tax & Legal services, Fatima Alshamaa, describes the implementation of DMTT as a significant milestone in Bahrain’s tax landscape for multinational enterprises. The tax is applicable exclusively to Bahraini entities that form part of MNE groups with annual revenues of EUR750 million or more as per the consolidated financial statements of the ultimate parent entity of the MNE. The DMTT does not apply to local Bahraini groups which do not have entities or establishments outside of the Kingdom. 

Ms. Alshamaa adds: “Scheduled to take effect on January 1, 2025, this legislation provides multinational companies with a preparatory period to assess its impact on their operations. Companies are advised to undertake thorough evaluations and seek specialised professional consultations to ensure full compliance with the forthcoming requirements.”

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