The National Bureau for Revenue (NBR) has published Bahrain’s first Domestic Minimum Top-Up Tax (DMTT) Transfer Pricing Guide, marking a key step in implementing the OECD Pillar Two Global Anti-Base Erosion (GloBE) framework.
The guide outlines how transfer pricing principles apply under the DMTT regime, detailing compliance, documentation, and arm’s length principles for multinational enterprise (MNE) groups in Bahrain.
Aligned with international OECD guidelines, the rules apply to cross-border transactions between entities within the same MNE group registered for DMTT. Key provisions introduce requirements for Local File and Master File documentation.
Commenting on the development, Shashank Arya, associate partner for tax advisory at Grant Thornton Bahrain, said: “The guidance provides greater certainty around Bahrain’s transfer pricing expectations under Pillar Two and reinforces the need for businesses to review their intercompany transactions, transfer pricing policies, and supporting documentation.”
The guide highlights how transfer pricing adjustments may affect Constituent Entity Income or Loss calculations, which form the basis for Pillar Two effective tax rate calculations and potential top-up tax liabilities.
Adding to the comments, Grant Thornton Bahrain director for corporate income tax and assurance Mohammed Abdulaal said: “Transfer pricing adjustments can directly impact Pillar Two calculations and potentially create additional top-up tax exposures. Organisations should assess not only the technical transfer pricing aspects of their arrangements but also the broader implications on their tax governance.”
The regulatory update comes as Bahrain strengthens its international tax framework ahead of introducing a broader Corporate Income Tax (CIT) regime.
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