On 17 June 2014, Bahrain's Council of Representatives approved the law ratifying the tax treaty with Hungary. The treaty was signed 24 February 2014, and is the first of its kind between the two countries.
The treaty covers Bahraini income tax, and Hungarian income tax and corporate tax.
- Dividends - 0% if the beneficial owner is a company, otherwise 5%
- Interest - 0%
- Royalties - 0%
Bahrain uses the credit method for the elimination of double taxation, while Hungary generally uses the exemption method. However, in the case of dividend income taxed in Bahrain, Hungary will use the credit method.
The treaty will enter into force 30 days after the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.