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On 29 December 2025, the Bahraini Cabinet approved the introduction of Corporate Income Tax ("CIT") in Bahrain, with implementation anticipated from 2027.
Key Features of the Proposed Regime
Based on the Cabinet's announcement, Bahrain is expected to introduce a 10% CIT applicable to businesses that meet either of the following thresholds:
- Annual revenues exceeding BHD 1 million, or
- Net annual profits exceeding BHD 200,000.
It is anticipated that the CIT would apply only to the portion of profits exceeding the BHD 200,000 threshold.
Legislative Status and Next Steps
At this stage, the text of the draft CIT law has not been published. The draft CIT law is expected to contain the main CIT framework, with detailed implementation rules and administrative procedures to be set out in accompanying regulations once the law has been enacted.
The draft CIT law has been referred to the Council of Representatives and will be reviewed by the Legislative and Legal Affairs Committee as part of the legislative process.
Impact on Businesses
This initiative forms part of Bahrain's broader strategy to diversify government revenue streams in line with Economic Vision 2030.
The implementation of CIT represents a significant development for businesses operating in Bahrain, particularly for groups that have historically operated in a tax-neutral environment. Companies should begin assessing the potential impact on their operating models, profitability, internal reporting and regional tax planning strategies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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