Allows an exclusion based on qualifying payroll and tangible assets, at up to 9.6% of payroll and 7.6% of tangible-asset carrying value (fiscal years starting in 2025), declining annually to 5% under the Reg. 46 table (e.g. 9.4% and 7.4% for years starting in 2026; the official table reads 7.2% for assets in 2028).
What should you do now?Classify eligible employees, payroll and tangible assets and their location, then apply the percentage for the relevant fiscal year.
What does the official Article provide?
The official source is Arabic. This English commentary is explanatory and is not presented as an official translation.
Allows an exclusion based on qualifying payroll and tangible assets, at up to 9.6% of payroll and 7.6% of tangible-asset carrying value (fiscal years starting in 2025), declining annually to 5% under the Reg. 46 table (e.g. 9.4% and 7.4% for years starting in 2026; the official table reads 7.2% for assets in 2028).
This is a verified summary, not a substitute quotation. The complete official Arabic text is linked below and must be read with the Regulations and later decisions for a final decision.
Arabic text of Article 10
The official source is Arabic. The English content on this page is explanatory and is not presented as an official translation.
Show the Article as published (Arabic)
الدخل المستبعد على أساس الجوهر
أ- يكون الدخل المستبعد على أساس جوهر النشاط (Substance-based Income Exclusion) لسنة مالية هو مجموع ما يلي:
1- تكاليف رواتب محددة تكبدتها الكيانات المشاركة التي تقع في المملكة، بنسبة أقصاها (9.6%) وأدناها (5%) من تلك الرواتب.
2- القيمة الظاهرة لأصول ملموسة محددة للكيانات التي تقع في المملكة في نهاية السنة المالية، بنسبة أقصاها (7.6%) وأدناها (5%) من القيمة الظاهرة لتلك الأصول.
ب- تضع اللائحة القواعد والشروط والضوابط الإضافية لتطبيق أحكام هذه المادة بالإضافة إلى قواعد حساب الدخل المستبعد على أساس الجوهر وغير ذلك من المسائل بما يتسق مع القواعد النموذجية والتوجيهات الإدارية والتعليقات الصادرة عن منظمة التعاون الاقتصادي والتنمية OECD.
Source: Decree-Law No. 11 of 2024, Legislation and Legal Opinion Commission (lloc.gov.bh).
What does the Article mean in plain language?
This is not a general payroll or asset exemption or a deduction from revenue; it is a defined component of taxable income requiring eligibility, correct percentages and period.
Tax, accounting, reporting and transfer-pricing teams in large groups.
Classify eligible employees, payroll and tangible assets and their location, then apply the percentage for the relevant fiscal year.
Using market value or total payroll without testing eligibility.
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Is the Article enough on its own?
Usually not. The Decree-Law states the rule, the Regulations detail the computation or procedure and guidance explains application. Use all three for an obligation, amount or deadline.
Are OECD materials binding by themselves?
Not every international document is Bahrain legislation by itself. It is used within the Law's referrals or a competent adoption instrument, while current Bahrain legislation and decisions remain controlling.