BAHRAIN Law and Practice Contributed by: Rad El Treki, Noor Al Rayes, Aayush Kainya and Mohamed Al Sari, Al Tamimi & Co.
implementation is targeted for 2027, this announce - ment has already fundamentally altered M&A valua - tions and financial modelling for deals currently in the pipeline. Additionally, a new draft corporate tax law is currently set for review by the Bahrain Parliament, and is due to be implemented in 2027. Some key headlines include the following. • Who it applies to: Resident legal persons on worldwide business income, and non-residents to the extent attributable to a Bahrain permanent establishment. Withholding tax (WHT) applies to Bahrain‑source income paid to non‑residents. Res - ident natural persons not carrying on a business, government entities and qualifying non‑profits are exempt. • Entry thresholds: The regime applies where, in a tax period, revenues exceed BHD1 million or tax - able income exceeds BHD200,000 (regardless of revenues). The first tax period begins on or after the law’s effective date (targeted from 2027 per the explanatory memorandum). • Rates and base: CIT at 0% on the first BHD200,000 of taxable income and 10% on tax - able income above BHD200,000. Taxable income starts from accounting profit (International Financial Reporting Standards (IFRS) or prescribed stand - ards) with statutory adjustments (eg, exemptions, non‑deductibles and depreciation per regulations). • WHT: Applies to Bahrain‑source income paid to non‑residents; 0% on dividends. Rates and cat - egories for other items (including interest, royalties, services and similar payments) will be set in regula - tions. WHT is final on the covered income, with quarterly filing/remittance by the withholding agent; phased WHT registration is to be set by ministerial decision. Judicial Sophistication and M&A Litigation The environment for resolving high-stakes M&A dis - putes has been transformed by the launch of the Bah - rain International Commercial Court (BICC) in Novem - ber 2025. Modelled after the Singapore International Commercial Court (SICC), the BICC allows for pro - ceedings in English and features a bench of renowned international judges. Most notably, a landmark agree -
ment now allows BICC judgments to be appealed to an international committee of the SICC. This “Singa - pore link” provides a level of legal certainty and inter - national standard-setting that was largely absent 12 months ago, making Bahrain a more attractive seat for cross-border transactional disputes. Merger Control and Foreign Direct Investment (FDI) While Bahrain remains highly open to foreign invest - ment, the Competition Protection Authority (CPA) has become more assertive in its oversight. Under the 2018 Competition Law, the CPA has sharpened its focus on “economic concentration”. For a merger to require notification today, it typically must involve a change of control where the resulting entity holds a market share of at least 40% (or 60% for a group). While these thresholds have not changed in the last year, the CPA’s procedural rigour and the integration of these checks into the Sijilat portal have made “com - petition clearance” a mandatory and time-sensitive milestone in almost every major local acquisition. 1.3 Key Industries In the financial space, the Central Bank of Bahrain (CBB) has intensified its oversight of market consoli - dation, particularly as the industry responds to the new 15% global minimum tax. Meanwhile, the information and communications technology (ICT) sector continues to be a focal point for national security reviews; as Bahrain accelerates its Data Hub initiative, any acquisition involving criti - cal digital infrastructure or dual-use technology now triggers a dual-track approval process involving both the Telecommunications Regulatory Authority (TRA) and the National Cybersecurity Centre to ensure the resilience of the Kingdom’s digital borders. The healthcare and logistics industries have also seen a spike in regulatory activity, though driven more by domestic policy shifts and competition enforcement. The 2025 roll-out of mandatory health insurance for the private sector has sparked a wave of consolida - tions among clinics and third-party administrators, leading to the CPA’s first significant interventions to prevent economic concentration in specialised medi - cal services.
11 CHAMBERS.COM
Powered by FlippingBook