Bahrain put in force yesterday the Domestic Minimum Top-Up Tax (DMTT) for large multinational enterprises operating on its soil whose global annual revenues exceed €750 million.

Those companies have to pay a minimum 15 per cent tax on their profits for every country where they operate.

The move aligns with the kingdom’s accession in 2018 to the comprehensive framework of the Organisation for Economic Co-operation and Development (OECD) in support of the two-pillar tax reform project in which more than 140 countries are taking part, including the GCC member states.

This type of tax is considered an effective means of achieving tax justice with large companies achieving huge revenues bearing a fair share of taxes, economists told our sister paper Akhbar Al Khaleej.

This enhances the fairness of the economic system and contributes to achieving fiscal balance, they added.

This tax also contributes to fighting tax evasion and minimising profit leakage abroad; therefore, providing additional resources to support infrastructure projects and sustainable development, they noted.

If those taxes were not levied in Bahrain, the multinational firms would remain obligated to pay them in other countries for activities carried out within the kingdom, which would result in Bahrain losing an important source of revenue that could have been invested in financing its development projects, the economic experts explained.

They stressed that the revenues collected from this tax would enable the kingdom to finance its ambitious plans in the health, education, and sustainable development sectors.

Those revenues will also help diversify sources of income and reduce dependence on traditional resources such as oil, which will boost economic sustainability, they added.

The experts ruled out the impact of this tax on Bahrain’s investment competitiveness, stressing that the kingdom will uphold its commitment to achieving a balance between enhancing its national revenues and maintaining its position as a distinguished investment destination in the region.

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