Latest news with #KhalidAlMaskati
Zawya
12-05-2025
- Business
- Zawya
Law to tax multinational companies is approved in Bahrain
Bahrain - A royal decree law imposing a 15 per cent Domestic Minimum Top-Up Tax on eligible multinational enterprises (MNEs) operating in Bahrain was unanimously approved by the Shura Council yesterday. The decree, originally issued by His Majesty King Hamad in August 2024, had already been approved unanimously by MPs. The landmark legislation brings Bahrain in line with international tax reforms led by the Organisation for Economic Co-operation and Development (OECD), specifically the global minimum tax initiative under the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), to which Bahrain has been a signatory since 2018. Under the new law, a 15pc minimum top-up tax will be levied on MNEs or projects with consolidated annual global revenues exceeding €750 million. The objective is to prevent tax base erosion by ensuring that multinational corporations contribute fairly to the domestic economy, rather than shifting profits to low- or no-tax jurisdictions. According to Shura's financial and economic affairs committee, the measure is part of a suite of urgent reforms to: l Enhance the sustainability of public revenues; l Identify new financial resources to fund rising public expenditure; l Address the national budget deficit; l Support infrastructure and development initiatives; and l Promote economic resilience and social justice. Committee chairman Khalid Al Maskati emphasised the strategic value of the tax. 'This law ensures Bahrain remains an active player in the evolving international tax framework. If we don't impose these taxes, multinationals will pay them elsewhere and Bahrain will lose a crucial revenue stream. 'This tax not only fulfils our international obligations under the OECD framework, but it also allows us to retain revenues from activities conducted within our borders. It is a strategic tool to finance vital infrastructure and services.' The law was issued by royal decree during the parliamentary recess under Article 38 of the Constitution, which permits urgent legislative action in exceptional circumstances. The legislation includes comprehensive provisions detailing the scope of application, mechanisms of tax calculation, administrative and criminal liabilities and dispute resolution procedures. Unlike traditional corporate taxation, the law targets both 'companies' and 'projects', ensuring broader coverage of all legal entities engaged in qualifying activities. This approach guarantees that legal structures cannot be used to avoid the tax. Mr Al Maskati stressed that Bahrain had signed on to Pillar Two of the OECD framework – focused on a global minimum tax on high-revenue MNEs – but not Pillar One, which targets digital services taxation. He also underlined that the law strengthens Bahrain's global investment appeal. 'By adopting this tax, Bahrain is not only meeting its international obligations, but also reinforcing its transparency and legal infrastructure. This positions us as a credible and attractive investment destination.' The government estimates that the new tax will generate BD130 million annually from 348 companies operating in Bahrain, pointed out Mr Al Maskati in a presentation that included statistics. Shura financial and economic affairs committee rapporteur Dr Anwar Al Sadah described the law as a 'cornerstone of fiscal sovereignty and economic modernisation'. 'The introduction of this top-up tax is a critical leap toward securing Bahrain's share of the global tax pie. It ensures that international corporations operating here do not exploit legal gaps to shift profits abroad,' he said. 'We are equipping our economy with the tools to grow independently while meeting global standards. This decree law serves not just as a revenue stream, but also as a declaration of Bahrain's commitment to equitable, rules-based growth. 'With full legislative backing and royal assent, Bahrain's implementation of the Domestic Minimum Top-Up Tax marks a pivotal shift in its fiscal policy landscape. The new framework not only fulfils Bahrain's international obligations but strategically positions the kingdom to capture its rightful share of multinational tax revenue – funds that will now fuel development projects and economic sustainability at home.' Shura legislative and legal affairs committee chairwoman Dalal Al Zayed praised the clarity of the legislative text, noting its legal rigour. 'The government has expertly leveraged international agreements as financial guarantees. The decree contains clear and specific provisions covering all forms of tax evasion, with mechanisms for complaints, appeals and criminal prosecution.' However, she raised a few concerns. 'The decree grants the tax authority a 10-year window starting from the commission of the crime, not from the discovery of it. This wording could weaken the prosecution of tax evasion. Also, some articles refer to financial benchmarks from 2023 despite the law coming into force in 2025 – does this imply retroactive application?' Ms Al Zayed also asked whether tax disputes would fall under the jurisdiction of administrative courts or if a special court circuit would be established. Shura human rights committee chairman Dr Mohammed Al Khozaie framed the law as a vital emergency measure. 'This law comes in the context of urgent steps to ensure revenue sustainability, especially as public spending expands across various sectors. It is key to financing infrastructure while tackling the budget deficit.' Shura Council member Fouad Al Hajji echoed that sentiment. 'This decree law is aligned with government policy agreed upon with Parliament during budget deliberations. It boosts state revenues without burdening citizens with new taxes or fees. It has both a financial and social dimension, as it channels corporate tax revenues into development projects that benefit the people.' Shura first vice-chairman Jamal Fakhro called for greater clarity on the figures. 'We need to know how many Bahraini and foreign companies will fall under this law. Will there be exemptions? There's a discrepancy in the projected revenues – BD100m cited by Parliament and BD130m by the Shura. These differences matter for future oversight.' National Bureau for Revenue chief executive Rana Faqih was present during the debate on the issue at the chamber's weekly session. Copyright 2022 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Zawya
14-04-2025
- Business
- Zawya
Bahrain: Law changes to enhance financial security backed
Bahrain - The Shura Council yesterday unanimously approved landmark amendments to the country's four-decade-old commercial law to enhance financial transparency, improve banking operations and protect consumers. The changes to the 1987 Commercial Law, which focus heavily on cheque regulations, have now been referred to His Majesty King Hamad for ratification. The move follows parliamentary approval in March and has the backing of key institutions including the Central Bank of Bahrain (CBB), the ministries of Industry and Commerce and Justice, Islamic Affairs and Endowments, the Bahrain Chamber and the Bahrain Businessmen's Association. These amendments address long-standing issues related to cheque misuse, joint account management and the legal enforcement of financial obligations. 'The move is a critical step forward in protecting both consumers and businesses from common financial pitfalls,' said Shura Council financial and economic affairs committee chairman Khalid Al Maskati. A central provision of the updated law is the prohibition of blank cheques being used as a form of credit security – a common practice that has resulted in numerous disputes and legal cases over the years. Another most impactful amendment is the option of partial cheque payments. If a drawer's account does not have sufficient funds to cover the entire cheque, the bank is now allowed – and in some cases obligated – to release available funds to the beneficiary. This partial payment mechanism is designed to reduce the number of bounced cheques and lessen the legal burden on recipients. The CBB has been granted the authority to determine the exact mechanism for implementing partial cheque settlements. The law states that once a cheque is certified, the corresponding amount must be frozen in the issuer's account until the cheque is presented. If there's a dispute, the amount remains frozen until the issue is resolved. Committee rapporteur Sadiq Al Rahma said the move allows for greater flexibility and reinforces the cheque's value as a trusted financial instrument. The amendments also introduce regulations surrounding joint bank accounts – particularly in the event of a co-holder's death or legal incapacitation. Banks will be required to freeze the deceased's share of the funds within 10 days of notification, ensuring rightful heirs receive their due without delay or legal ambiguity. During a debate on the amendments, several council members raised important implementation-related concerns. First vice-chairman Jamal Fakhro questioned whether partial cheque settlements were common practice internationally or a region-specific innovation to address rising cheque defaults. 'We need clarity on when the law will take effect and how beneficiaries can recover funds efficiently,' he said, also raising concerns about the complexity of freezing joint accounts and determining responsibility. Council member Abdulla Al Nuaimi stressed the need for a unified regulatory framework. 'The Bahrain Chamber's call to expand consumer protection authorities' role in cheque-related issues is valid, but this must be under the supervision of the CBB,' he argued. Council member Ali Al Aradi noted that while the CBB will issue a decision on the phased implementation of partial cheque payments, more clarity is needed on how such payments would be treated legally. 'The law recognises a cheque as a payment instrument, not a debt instrument,' he said. 'There needs to be a clear mechanism to convert a partial payment into an enforceable legal document.' The Bahrain Chamber emphasised the importance of strict penalties for cheque fraud and called for access to the national credit rating system to enable businesses to assess financial risk more accurately. mohammed@ Copyright 2022 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Zawya
27-03-2025
- Business
- Zawya
Bahrain: Big infrastructure projects on track
Bahrain is set to embark on a series of multi-dinar infrastructure, education, health and municipal projects this year and the next. Shura Council financial and economic affairs committee chairman Khalid Al Maskati gave details of the plans during a review of the 2025-2026 national state budget yesterday. MPs approved the budget on Tuesday while the Shura Council is expected to vote on it during an extraordinary session today. If approved, it will be referred with urgency to His Majesty King Hamad for ratification. On the cards are six massive artery roadwork infrastructure projects covering 10.5km, 11 inner roads covering 21.2km, maintenance of 14 main roads covering 375 linear km, maintenance of 40 inner roads covering 330 linear km and 16 sewage networks with 5,242 connections. Also planned are revamps to the Wali Al Ahd Highway stretching from the Riffa Clock Tower to Janabiya Highway, the fourth bridge connecting Muharraq with Manama, expanding Shaikh Isa Bin Salman Highway, developing Budaiya Highway, revamping the Shaikh Isa Bridge intersection with Road 105, developing Shaikh Zayed Highway intersection with Shaikh Isa Bin Salman Highway, expanding the Shaikh Jaber Al Ahmed Al Sabah Highway and revitalising routes leading to Bahrain International Airport (Falcon Junction). Municipal projects include constructing 46 public parks and gardens, revamping six coasts, developing four central markets and five mega projects in partnership with the private sector. Three new schools will be built this year and two in the next, while historic schools closed for revamps, stabilisation and preservation over the past few years will be reopened. Also planned are two academic buildings each this year and the next with scheduled maintenance of 80 schools. The Bahrain Teachers College will see an increased enrolment capacity for 323 freshmen this year and 300 next year, employing 275 Bahraini graduates and providing 1,200 school teachers with developmental training. Bahrain's social and rehabilitation centres are set to increase from 15 to 19 with the construction of Budaiya Social Centre, Social Care and Protection Complex, Comprehensive Social Services Complex and the Comprehensive Disability Complex. Current centres cover 64,000 individuals annually. Healthcare projects include the genome centre and bank, new health centres, developing existing departments in government hospitals, and establishing emergency teams for health scares. Plans also include the implementation of health insurance on expat residents who on an average visit government hospitals 1.2 million times and health centres 5.5m times in a year. Also planned are additional fees for health insurance on 1.6m tourists expected this year. Increasing sin (selective) tax on tobacco and energy drinks to 150 per cent and lowering the volume of soft and fizzy drinks, which are taxed 50pc, are also being planned. The Housing and Urban Planning Ministry will carry out direct work on 3,754 social housing units through six projects, providing 4,123 social housing units in partnership with the private sector. The Electricity and Water Affairs Ministry will spend BD400m to develop existing electricity and water networks, and invest $2 billion in building two electricity power plants. The Labour Ministry aims to employ 25,000 Bahrainis and train 15,000 annually. Meanwhile, the Shura financial and economic affairs committee also reviewed a draft law amending the 1977 Bonds Law to raise Bahrain's borrowing ceiling to BD22.5bn – to finance the budget deficit and meet upcoming financial obligations. 'Raising the borrowing limit is necessary to ensure economic stability while funding critical projects. It is a calculated move that will support Bahrain's long-term growth,' Mr Al Maskati explained.
Zawya
04-03-2025
- Business
- Zawya
Bahrain: 2% tax on remittances is rejected
Bahrain - The Shura Council has, once again, rejected a legislation that would have imposed a two per cent tax on each expatriate remittance, asserting that the 'disastrous' plan would only lead to money laundering. Financial and economic affairs committee chairman Khalid Al Maskati yesterday said the bill would have a negative impact on the economy and encourage blackmarket and unauthorised cryptocurrencies. He said MPs had overlooked several factors while approving the legislation in Parliament. 'This disastrous legislation will only reduce remittances made through official channels in favour of illegal money transfer systems,' Mr Al Maskati said during the weekly session yesterday. In January, Parliament insisted on imposing the levy more than a year after the proposal was unanimously rejected by the Upper Chamber of the National Assembly – following a previous unanimous approval by MPs. A joint vote of the National Assembly will be scheduled on the issue. A joint vote has not been taken since 2002 to resolve disputed legislations, which means the topic would likely be put on hold until new MPs and Shura members in 2026 decide to take it up for reconsideration. Mr Al Maskati further explained that the proposed legislation contradicted mutual and international agreements and conventions and would harm plans to attract investments. 'For instance, adopting the legislation would mean breaching the Unified Arab Investment Agreement which disallows imposing any restrictions – whether administrative, legal or financial – on Arab capital and investments,' he said. Committee rapporteur Sadiq Al Rahma said the negatives far outweighed the positives and that the proposal was impractical. 'The expected revenue from two per cent tax is low and doesn't constitute as proper government income, while the damage to revenues from other related avenues would be grave,' he added. 'Around 72pc of expats earn less than BD200 a month and they will seek alternative illegal channels to send money. 'It means that either employers will have to increase wages or increase the cost of service. 'Besides, the move could encourage money laundering and result in losses for money transfer agencies, leading to a sequence of other disastrous outcomes.' Member Ali Al Aradi said legislations are introduced to solve problems and foreign remittance wasn't a problem. 'I have been asking myself, why did MPs propose 2pc and not 0.5pc or 1pc or even 5pc – it is because the legislation was introduced without a comprehensive study,' he said. Member Abdulla Al Nuaimi said approval of the legislation could lead to Bahrain becoming a haven for fraudsters. 'Instead of focusing on resolving issues related to foreign manpower and associated costs, MPs are putting emphasis on remittances as if it is the main problem,' he said. Finance and National Economy Ministry officials, represented by the National Bureau for Revenue, earlier said the levy contradicted the basic principles of freedom of money transfer. It also violated the concept of tax as such levies should be inclusive, without anyone being singled out, which was not the case with this legislation, they added. 'The move will have a negative impact on the economy, in general, and the financial and commercial sectors, in particular,' said ministry officials. 'Imposing such a tax would cause massive damage as it will lead to the emergence of illegal transfer channels. 'The World Bank and the International Monetary Fund have, in numerous studies, shown that countries that took the approach have faced trouble controlling transfers and we do not want the same situation here.' The officials added that such taxes wouldn't be paid by workers and would be forced on sponsors, which would add to the burden on businessmen. 'Such taxes will hugely affect expatriates in leadership positions in companies and banks in Bahrain and it could even lead to them moving to other countries,' they added. 'Bahrain is working towards being a more competitive regional hub. There are also companies that make regular transfers every day, in bulk, and such tax is just illogical and frustrating for them.' Copyright 2022 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Daily Tribune
17-02-2025
- Business
- Daily Tribune
Shura Council blocks MP proposal to ban tourist-visa-to-work-permit conversions
A plan to ban the conversion of tourist visas into work permits has been knocked back by the Shura Council, with ministers arguing that existing enforcement has already cut such cases by 87 per cent. They warned that the proposal would only add costs for businesses without solving any real issue. The upper house threw out the amendment to the Aliens (Immigration and Residence) Law of 1965 and sent it back to Parliament for another look. The draft law aimed to introduce a new Article (7) bis, barring visit visa holders from switching to work permits in all cases. Proposal But after going through the proposal put forward by MPs, the Foreign Affairs, Defence, and National Security Committee decided there was no need for it. Committee Chairman Dr Ali Al Rumaihi, pointed to a ministerial decision already in place, saying it had slashed visa conversions. 'The Interior Minister's decision has reduced tourist visa switches by 87 per cent,' he said. Inspections 'That shows the authorities are on top of the matter. The committee agreed that inspections by the Interior Ministry and the Labour Market Regulatory Authority are doing the job well enough. Instead of rushing into new laws, we should let these agencies keep refining their work.' Council member Khalid Al Maskati said the proposal could make things worse. 'Blocking these visa conversions could leave more Bahrainis out of work,' he said. 'Our focus should be on making sure Bahrainis get first go at jobs. The Interior Ministry has made it clear that strict rules already govern these visa switches, and the Labour Market Regulatory Authority is keeping a close watch. What the law is trying to fix is already being handled.' Breathing room Committee rapporteur Nancy Khadhori said the current system allowed for some breathing room, with Article 18 of the law giving authorities leeway in granting and renewing residency. Foreigners can stay in Bahrain if they can support themselves and their dependents, and there are already rules in place allowing certain visas to be converted into work permits if the right conditions are met. Another worry was the extra cost for Bahrainis hiring expat workers in roles locals rarely take, such as domestic staff. Travel At the moment, employers aren't responsible for paying for a worker's travel if their visa expires. If the amendment went through, Bahrainis could be forced to cover the cost of sending a worker home and bringing them back on a work visa — a needless financial strain. Ali Al Aradi said there was no need for heavy-handed legislation when the current system was flexible enough to deal with shifts in policy. Tourist 'Rules can be adjusted as needed,' he said. 'When a tourist becomes a worker, their home country should be notified, as should their previous employer if it applies. This is not something Bahrain alone controls, which is why it's best left to administrative decisions rather than hard-and-fast laws.' The Shura Council wrapped up the debate by agreeing that the current laws and rules were enough to deal with the issue. With too many downsides and no clear gain, the draft law was rejected and sent back to Parliament for another round of talks.
