Bahrain’s National Bureau for Revenue has published the DMTT Computation Guide Version 1.0, setting out the 12-step calculation process for the 15% Domestic Minimum Top-up Tax applicable to in-scope MNE Groups from 1 January 2025.
Bahrain’s National Bureau for Revenue (NBR) has issued the DMTT Computation Guide Version 1.0 on 23 August 2026, providing guidance on how in-scope Multinational Enterprise (MNE) Groups should calculate the 15% Domestic Minimum Top-up Tax (DMTT).
The DMTT applies from 1 January 2025 to MNE Groups operating in Bahrain with consolidated group revenue of EUR 750 million or more in at least two of the four preceding fiscal years.
The DMTT was introduced under Decree-Law No. 11 of 2024 (the DMTT Law), issued on 1 September 2024, while Decision No. 172 of 2024 established the Executive Regulations on 11 December 2024.
12-step DMTT calculation
The guide sets out a 12-step computational sequence that a Filing Constituent Entity must follow to determine the DMTT liability of an in-scope MNE Group.
The calculation begins with Financial Accounting Net Income or Loss for each Bahrain-located Constituent Entity included in the UPE’s Consolidated Financial Statements. This is adjusted to determine Constituent Entity Income or Loss, followed by the identification, allocation and adjustment of Covered Taxes.
The subsequent steps cover the calculation of the Effective Tax Rate (ETR), the Additional Tax Rate, Substance-based Income Exclusion (SBIE), Taxable Income, Additional Current Tax and Additional Tax for Permanent Differences.
Substance-based income exclusion
The Substance-based Income Exclusion (SBIE) consists of a payroll carve-out and a tangible assets carve-out.
For fiscal years starting in 2026, the transition multiplier is 9.4% for eligible payroll costs and 7.4% for eligible tangible assets. The payroll calculation can be pro-rated where an employee spends less than 50% of their working time in Bahrain.
Safe harbours and exclusions
The DMTT framework provides several safe harbours and exclusions that can result in Tax Due being nil. These include the Transitional Country-by-Country Reporting Safe Harbour, De Minimis Exclusion and Simplified Computation Safe Harbour.
Entities using these provisions must still meet administrative requirements, including registration and the submission of Tax Returns.
Accounting standards and materiality
The guide relies on the accounting principles used for the UPE’s Consolidated Financial Statements when determining the MNE Group and calculating DMTT.
IFRS and certain GAAP frameworks are recognised as Acceptable standards. While AAOIFI is authorised in Bahrain, it is not an Acceptable standard for DMTT purposes. Adjustments may therefore be required to prevent Material Competitive Distortions where the relevant variation exceeds the applicable materiality threshold.
Standalone calculations
Separate Effective Tax Rate (ETR) and top-up tax calculations apply to certain entities that are excluded from the general Bahrain jurisdictional blending.
These include Minority-Owned Constituent Entities (MOCEs), Investment Entities and Insurance Investment Entities, Stateless Constituent Entities, and Joint Ventures (JVs) and JV Subsidiaries.
The guide also provides specific mechanisms for Investment Entities and Insurance Investment Entities, including the Tax Transparency Election Method and Taxable Distribution Method.
Corporate restructuring
The guidance covers acquisitions, disposals and qualifying reorganisations, including mergers, demergers and liquidations.
An acquired Target Entity is generally included in the group for the period during which its results are included on a line-by-line basis in the UPE’s Consolidated Financial Statements. For qualifying reorganisations, the acquiring entity may inherit historical carrying values, with transfers of assets and liabilities generally not triggering taxable gains or losses for DMTT purposes.
Earlier, NBR published Version 1.0 of its DMTT Return Filing Manual, setting out procedures for filing, payment and refunds under the 15% DMTT.
