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9.1. Unilateral and Treaty Based Methods Available for the Elimination or Mitigation of Double Taxation

Under the current tax system, Bahrain does not levy a corporate or profit tax and therefore there is no allowance for foreign tax credits.  Since Bahrain does not allow foreign tax credits, foreign tax credit carry-forward or carry-backs do not exist.

Below is a summary of the available methods for various income tax streams based on domestic law.

Royalty Copyright NC
Capital Gains ND
Dividends NC
Interest NC
Royalty Patent NC
Sales NC
Service Management NC
Service Technical NC
Royalty Trademark NC

The credit column shows the type of foreign tax credit granted when the receiving country receives a payment.  Four abbreviations are used for the type of foreign tax credit available:

  • NC means no credit but foreign withholding taxes can be deducted.
  • OC means ordinary credit, i.e., credit for foreign withholding taxes (e.g., withholding taxes).
  • IC means indirect credit, i.e., credit for underlying corporate taxes as well as foreign withholding taxes.
  • ND means no credit and no deduction for any foreign withholding taxes incurred.