Middle East Tax handbook 2017Clarity. Connection. Confidence.
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Deloitte | ME Tax handbook 2017
ForewordbyNaumanAhmed
Bahrain
Egypt
Iraq
Jordan
Kuwait
Lebanon
Libya
Oman
PalestinianRuledTerritories
Qatar
SaudiArabia
Syria
UAE
Yemen
DeloitteInternationalTax
Source(DITS)
YourDeloitteMiddleEastTax
contacts
SummaryofDeloitteTax
services
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Contents
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Deloitte | ME Tax handbook 2017
Iampleasedtopresentthe2017editionoftheDeloitte
MiddleEastTaxHandbookacomprehensiveguidetohelp
youkeepabreastofglobaltaxratesandregimes.
Changesinregulationandtaxreformareoftentriggeredbya
numberofevents,andwithoutdoubt2016wasayearof
significantglobalpoliticalchangeanduncertainty,including
BritainsdecisiontoleavetheEUandanunexpectedresultin
theUSpresidentialelections.Whilenotdirectlylinkedtothe
MiddleEast,thesemajorshiftsinthepoliticallandscapehave
alreadysentripplesacrosstheworld,andwecanonly
speculateastowhattheirfulleffectswillbe.
Againstthispoliticalbackdrop,thereisamplifiedscrutinywith
regardtothetransparencyoftaxplanningandanethical
pressureoncorporationstopaytheirfairshareoftax.This
translatestoapressureforbusinessestonavigateawebof
increasinglycomplexrulesandprocedures.
OneofthemostsignificanttaxchangesfortheMiddleEastis
theimpendingintroductionofvalueaddedtax(VAT)tothe
GCC,expectedtocomeintoeffectin2018.Asaresult,VATis
highonthebusinessagenda,withboardsofdirectors
focusingontaxstrategyasakeypartoftheirfuture
governanceactivities.Theupcomingyearswillseean
increasedneedforbusinessestomanagetaxasafunction,
puttinginplacetheprocessesandpeopleneededtosupport
itsimplementationandpotentiallyestablishingdedicated
resourcestooverseeVATactivities.
Foreword
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Deloitte | ME Tax handbook 2017
Thepotentialimpactofimplementationandoperationofa
VATsystemisexpectedtobesignificantforalllarge
businessesoperatingintheregion,touchingonaverybroad
sectionofbusinessesactivitiesandsupportfunctions.We
expecttheprocessforfulltransitionwilllikelyspantwoto
threeyearsandthattheeffectiveimplementationofVATwill
likelypavethewayforfurthertaxreform.
Preparednessisessentialforadaptingtoregulatorychange.
Businessesneedtounderstandtheexposurestheyhave,in
allofthecountriestheyoperatein,aswellasputastrategic
frameworkinplacetoensuretheycreatelong-termvalueand
arecompliantinthisnewworldoftaxregulation.Atpresent,
wecontinuetocarefullymonitorthesetrendsinregulationto
helpyoubettermanagewhatliesahead.
Nauman Ahmed
Middle East Tax Leader
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Deloitte | ME Tax handbook 2017 | Bahrain
Investment basics
Currency BahrainiDinar(BHD)
Foreign exchange control No
Accounting principles/financial statements
IFRS.Financialstatementsmustbefiledannually.
Principal business entities
Themostcommonvehiclesarewithlimitedliability(W.L.L.)
andsinglepersoncompany(S.P.C).Otherlegalformsinclude
abranchofaforeigncompany,partnership,simple
commanditecompanyandholdingcompany.Theminimum
capitalrequirementsintheCommercialCompaniesLawhave
beenreducedforshareholdersofaW.L.L.andS.P.C.
Corporate taxation
Residence
Residenceisnotdefined.Acompanyengagedinoil,gasor
petroleumactivitiesistaxed,regardlessofwherethe
companyisincorporated.
Basis
ThereisnocorporatetaxformostcompaniesinBahrain,but
incometaxisleviedontheprofitsofoilcompanies.
Corporateincometaxisleviedonlyonoil,gasandpetroleum
companiesengagedinexploration,productionandrefining.
Taxable income
TherearenotaxesonincomeinBahrain,withtheexception
ofoilandgascompaniesasdescribedabove.Netprofits
(taxableincome)ofoilandgascompaniesconsistofbusiness
incomelessbusinessexpenses.
Taxation of dividends No
Bahrain
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Deloitte | ME Tax handbook 2017 | Bahrain
Capital gains No
Losses
Tradinglossesmaybecarriedforwardindefinitely.The
carrybackoflossesisnotpermitted(oilcompaniesonly).
Rate
Ataxrateof46%isleviedonnetprofits(taxableincome)of
companiesengagedintheextraction,productionorrefining
ofhydrocarbons.
Surtax No
Alternative minimum tax No
Foreign tax credit No
Participation exemption No
Holding company regime No
Incentives No
Withholding tax
Dividends No
Interest No
Royalties No
Technical service fee No
Branch remittance tax No
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Other taxes on corporations
Capital duty No
Payroll tax No
Real property tax No
Social security
ForBahrainiemployees,theemployer'ssocialinsurance
contributionis12%,whichcoversoldage,disability,death
andunemployment.Forexpatriateemployees,the
employer'ssocialinsurancecontributionis3%,whichcovers
employmentinjuries.
Stamp duty
Stampdutyisleviedonpropertytransfersonthebasisofthe
valueoftheproperty.
Transfer tax No
Other
Alevyof10%isimposedonthegrossturnoverofhotelsand
firstgraderestaurants.Typically,this10%levyischargedby
hotelsandrestaurantstocustomersontheirbills.
A10%municipalitytaxisleviedontherentalofcommercial
propertyandresidentialpropertyoccupiedbyexpatriates.
Anti-avoidance rules
Transfer pricing No
Thin capitalization No
Controlled foreign companies No
Deloitte | ME Tax handbook 2017 | Bahrain
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Disclosure requirements No
Compliance for corporations
Tax year
Calendaryearortheyearspecifiedinthecompanysarticles
ofassociation.
Consolidated returns No
Filing requirements
Oilcompaniesarerequiredtofileanestimatedincometax
declarationonorbeforethe15thdayofthethirdmonthof
thetaxyear.Taxmustbepaidin12monthlyinstallments.
Penalties
A1%monthlypenaltyisimposedforfailuretofileandpay
tax.
Rulings No
Personal taxation
Basis No
Residence No
Filing status No
Taxable income No
Capital gains No
Deductions and allowances No
Rates No
Deloitte | ME Tax handbook 2017 | Bahrain
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Other taxes on individuals
Capital duty No
Stamp duty
Stampdutyisleviedonpropertytransfersonthebasisofthe
valueoftheproperty.
Capital acquisitions tax No
Real property tax No
Inheritance/estate tax No
Net wealth/net worth tax No
Social security
ForBahrainiemployees,theemployee'scontributionis7%,
whichcoversoldage,disability,deathandunemployment.
Forexpatriateemployees,theemployee'scontributionis1%,
whichcoversunemployment.
Compliance for individuals
Tax year Calendaryear
Filing and payment
Monthlyreturnsbytheemployermustbe
