BAHRAIN will impose corporate tax once an international agreement is reached on the framework, according to a top minister.
Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa told MPs, during their weekly session yesterday, that the Organisation for Economic Co-operation and Development (OECD) was currently working on a global corporate taxation structure.
According to the Paris-based organisation, “Tax on corporate profits is defined as taxes levied on the net profits (gross income minus allowable tax relief) of enterprises. It also covers taxes levied on the capital gains of enterprises.”
In October 2021, the OECD said that the international community had agreed on a landmark deal for a two-pillar solution to the tax challenges arising from the digitalisation and globalisation of the economy.
As part of this plan, Pillar Two establishes a global minimum effective corporate tax rate of 15 per cent for large multinational enterprises.
“It is a global direction to impose corporate taxes and Bahrain is committed to comply with the move,” said the minister.
“When the international legislations are crystal clear then a comprehensive local legislation would be formulated and presented to the National Assembly,” he added.
“We firmly believe that companies should contribute to the sustainability of the economy and financial development of the country.
“The issue is a matter of when, not if, as we continue to work with the OECD on getting things right as we ensure that it wouldn’t have an economic impact that affects employment, economic growth and investments.”
Shaikh Salman said the delay in introducing corporate tax was due to a delay in input from international organisations and companies.
The minister added that the contribution of the non-oil sector to the economy had surpassed 83 per cent, indicating that employment in the private sector had risen. “Most Bahraini workers are in the private sector and we have to consider their welfare.
Work was ongoing to ensure the sustainability of pension funds, said Shaikh Salman.
“The sustainability of the funds continues to be a priority and the Social Insurance Organisation (SIO) is working on a comprehensive actuarial study to ensure funds remain constant in their operations.
“Whenever the study is complete updated lifespan statistics will be presented and accordingly we will work with legislators on proposals, options and solutions to further reach better sustainability levels.”
The minister and other senior government officials were present during the session to respond to multiple questions and reply on proposals the Cabinet had reviewed regarding corporate tax, resumption of suspended flights, video and audio productions, and markets.
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