By Fahdan Business Solutions · Last updated: 8 July 2026

Written by the Fahdan Business Solutions advisory team — 17+ years advising on company formation and tax in Bahrain and Saudi Arabia, with 6,000+ companies formed across the GCC. Reviewed for accuracy by [insert reviewer name & qualification]. This guide is updated whenever Bahrain’s tax rules change.

Corporate tax in Bahrain remains 0% for most businesses. Bahrain does not charge a general corporate income tax, so most companies — including foreign-owned businesses, SMEs and startups — pay 0% on their profits. Since 1 January 2025, a 15% Domestic Minimum Top-up Tax (DMTT) applies only to large multinational groups with global revenue of €750 million or more. Oil and gas companies are taxed at 46%. For everyone else, the rate is still 0%.

For years, the answer to “does Bahrain have corporate tax?” was a simple no. That is still true for the overwhelming majority of businesses — but as of 2025 it is no longer the whole story. Bahrain became the first Gulf country to introduce a targeted minimum tax on large multinationals, and a lot of the advice online hasn’t caught up. This guide gives you the accurate 2026 position: what you pay, what’s new, and — most importantly — whether any of it applies to you.

Does Bahrain have corporate tax in 2026?

No general corporate income tax applies to most businesses in Bahrain. The standard corporate tax rate is 0%. There are only two exceptions: oil, gas and petroleum companies (taxed at 46%), and large multinational groups that fall under the new 15% Domestic Minimum Top-up Tax. If your business is not in the hydrocarbon sector and not part of a group earning €750m+ globally, you pay 0% corporate tax.

Here is the full picture at a glance:

This combination — no personal income tax, no capital gains tax, no withholding tax, and 0% corporate tax for most sectors — is why Bahrain is still one of the most tax-efficient places to base a business in the GCC.

What is the new 15% tax in Bahrain (DMTT)?

The Domestic Minimum Top-up Tax (DMTT) is a 15% minimum tax on the Bahrain profits of very large multinational groups. It was introduced by Decree-Law No. 11 of 2024 and took effect for financial years starting on or after 1 January 2025. It is administered by Bahrain’s National Bureau for Revenue (NBR).

The DMTT is Bahrain’s way of adopting the OECD/G20 “Pillar Two” global minimum tax — an international agreement that says the largest multinationals should pay at least 15% tax wherever they operate. Rather than let another country collect that top-up tax on profits earned in Bahrain, Bahrain now collects it itself. It is the country’s first general profit tax outside the oil and gas sector, and Bahrain was the first GCC state to implement one. For a full breakdown of scope, calculation and reliefs, see our detailed guide to the Bahrain DMTT.

Key facts about the DMTT:

• Rate: a minimum effective rate of 15% on in-scope profits.
• Legal basis: Decree-Law No. 11 of 2024, published by the NBR in September 2024.
• Effective date: financial years beginning on or after 1 January 2025, with advance payments starting in 2025.
• Regulator: the National Bureau for Revenue (NBR), which published updated scope and registration guidance in December 2025.

Who has to pay the DMTT — and who doesn’t?

The DMTT applies only to companies that are part of a multinational group with consolidated annual revenue of €750 million or more in at least two of the previous four financial years. If your business is below that threshold, the DMTT does not apply to you.

In scope (may owe the 15% tax):

• Bahrain companies, branches and permanent establishments that belong to a multinational enterprise (MNE) group.
• Where that group’s worldwide revenue reaches €750 million+ in two of the last four years.

Out of scope (still 0%):

• Small and medium businesses, startups and solo consultants.
• Most foreign-owned companies setting up in Bahrain.
• Purely domestic Bahraini companies with no large parent group.
• Government bodies, non-profits, pension funds and certain investment funds (specifically excluded entities).

Even for groups that are in scope, Bahrain built in relief. A Substance-Based Income Exclusion removes a slice of profit from the tax based on the group’s real tangible assets and payroll in Bahrain — rewarding companies that have genuine operations here rather than a paper presence. There is also a transitional safe harbour that can reduce the tax to zero for up to five years for groups in the early phase of international expansion (broadly, those operating in no more than six jurisdictions with limited assets abroad).

If you are unsure whether your group crosses the threshold, this is exactly the kind of question worth checking early — Fahdan’s business consultancy team can help you assess your position and structure it correctly, and support Economic Substance (ESR) registration where it’s required.

Do I still pay 0% corporate tax if I set up a small company in Bahrain?

Yes. If you are setting up an SME, a startup, a consultancy, a trading company or a holding company that is not part of a €750m+ multinational group, you pay 0% corporate tax on your profits in Bahrain. The DMTT changed nothing for the vast majority of Fahdan’s clients.

That means a foreign entrepreneur forming a company in Bahrain today still keeps effectively all of their trading profit, with no corporate income tax, no tax on dividends taken out, and no personal income tax on salary. Combined with 100% foreign ownership in most activities and a USD-pegged currency, that is a strong base for reaching the wider Gulf market.

If you’re weighing up the move, our full company formation in Bahrain service walks you through structure, licensing and banking, and our Bahrain company formation packages show transparent, fixed pricing.

What other taxes apply beyond corporate tax in Bahrain?

Beyond corporate tax, the main ongoing charge for most businesses is 10% VAT. There is no personal income tax, no capital gains tax and no withholding tax. Employers also make social insurance contributions for staff. Here’s what to budget for:

• VAT — 10%. Bahrain’s standard VAT rate rose from 5% to 10% in 2022. It applies to most local sales of goods and services, with a 0% rate available on qualifying exports. Registration is mandatory once your taxable turnover passes the threshold. See our full guide to VAT registration in Bahrain for thresholds and the step-by-step process. Fahdan handles VAT registration as part of getting you operational.
• Social insurance. Employers and employees pay contributions to the Social Insurance Organisation (SIO). Rates differ for Bahraini and expatriate staff and are updated periodically — confirm the current rates with Fahdan before budgeting payroll.
• Excise tax. Bahrain applies excise on specific goods such as tobacco, energy drinks and soft drinks. It affects importers and sellers of those products, not businesses generally.
• Government and licensing fees. Commercial Registration (CR) issuance, renewals and activity-specific approvals carry fixed government fees, billed at actual cost.

There is still no tax on dividends, interest or royalties paid out of Bahrain, which makes it efficient for holding companies and regional structures.

How does Bahrain’s corporate tax compare to the UAE, Saudi Arabia and Qatar?

For most businesses, corporate tax in Bahrain is the lowest general rate in the GCC at 0% — lower than the UAE’s 9%, Saudi Arabia’s 20% and Qatar’s 10%. Even under the new global minimum-tax rules, Bahrain’s 15% for large multinationals matches the international floor rather than exceeding it.

Rates are for most business activities; oil, gas and certain regulated sectors are taxed differently in each country. Figures current as of mid-2026 — confirm before making decisions.

This is why many businesses use Bahrain as a low-cost base to serve Saudi Arabia, which sits just across the King Fahd Causeway. For a side-by-side breakdown, see our comparison of Bahrain vs the UAE for company setup. If Saudi Arabia is your target market, Fahdan also handles company formation in Saudi Arabia directly.

What this means for setting up in Bahrain

For nearly everyone reading this, corporate tax in Bahrain in 2026 is unchanged: 0%, and you keep your profits. The 15% DMTT is a narrow, headline-grabbing rule aimed at the world’s largest corporate groups, softened by substance-based relief and a multi-year safe harbour. It does not touch SMEs, startups or most foreign-owned companies.

What has changed is that “Bahrain has no corporate tax” is now a claim that needs a footnote — and getting your structure, thresholds and compliance right from the start matters more than it used to.

Not sure where your business falls? Book a free consultation with Fahdan. With 17+ years in the market and 6,000+ companies formed in Bahrain and Saudi Arabia, we’ll tell you exactly what you’ll pay, handle the registration and paperwork, and get you operational — banking, VAT and visas included.

Frequently asked questions

Is Bahrain still tax-free in 2026? For most businesses and all individuals, effectively yes. There is no personal income tax, no capital gains tax and no withholding tax, and corporate tax is 0% for most sectors. The only profit taxes are 46% on oil and gas and a 15% minimum tax on large multinationals.

What is the corporate tax rate in Bahrain? 0% for most companies. 46% for oil, gas and petroleum companies. 15% for constituent entities of multinational groups with €750m+ in global revenue, under the DMTT that took effect on 1 January 2025.

Does the 15% DMTT apply to small businesses or startups? No. It applies only to companies that are part of a multinational group earning €750 million or more globally in at least two of the last four years. SMEs, startups and most foreign-owned companies are not in scope and continue to pay 0%.

Do foreign-owned companies pay corporate tax in Bahrain? No — foreign ownership itself does not trigger corporate tax. A 100% foreign-owned company pays 0% corporate tax unless it is in the oil and gas sector or part of a €750m+ multinational group subject to the DMTT.

Is there personal income tax in Bahrain? No. Bahrain does not levy any personal income tax on salaries or wages.

What is the VAT rate in Bahrain? The standard VAT rate is 10% (increased from 5% in 2022). Qualifying exports can be zero-rated. VAT registration becomes mandatory once your taxable turnover exceeds the registration threshold.

When did Bahrain introduce corporate tax? Bahrain has long taxed oil and gas at 46%. Its first general profit tax — the 15% DMTT for large multinationals — was introduced by Decree-Law No. 11 of 2024 and applies to financial years starting on or after 1 January 2025.

Do I need to register for the DMTT? Only if your group is in scope (€750m+ global revenue). In-scope groups must appoint a filing entity, register with the National Bureau for Revenue (NBR) and make advance and annual payments. If you’re unsure, speak to Fahdan before any deadline.

Sources

All figures in this guide were checked against the following sources. Because tax rules change, confirm the latest position with the relevant authority before making decisions.

• Bahrain DMTT (15%, Decree-Law No. 11 of 2024, effective 1 January 2025, €750m threshold): National Bureau for Revenue (NBR); EY, BDO, FTI Consulting, Sovereign Group and Middle East Briefing global tax alerts.
• NBR scope & registration guidance (v1.1, 1 December 2025) and updated FAQs (January 2026): National Bureau for Revenue.
• OECD/G20 Pillar Two global minimum tax framework: OECD BEPS / Pillar Two.
• Bahrain 0% general corporate tax and 46% oil & gas rate; VAT 10% (raised from 5% in 2022); no personal income, capital gains or withholding tax: official Bahrain government sources and GCC tax overviews.
• Social insurance contributions: Social Insurance Organisation (SIO) — confirm current rates directly, as they are updated periodically.
• GCC comparison (UAE 9% + DMTT; Saudi Arabia 20% + 2.5% Zakat, VAT 15%; Qatar 10% + DMTT): official tax authority publications for each country.

This article is general guidance, not tax or legal advice. Tax rules, rates and government fees can change — always confirm your specific position with Fahdan or the National Bureau for Revenue before making decisions.