Treats Additional Tier One distributions as expense for the issuer and income for the recipient for constituent-entity income or loss.
What should you do now?Reconcile issuer and recipient entries and the instrument's features before adjustment.
What does the official Article provide?
The official source is Arabic. This English commentary is explanatory and is not presented as an official translation.
Treats Additional Tier One distributions as expense for the issuer and income for the recipient for constituent-entity income or loss.
This is a verified summary rather than a verbatim reproduction. Consult the official Arabic text, the Law and later decisions before making a final determination.
Arabic text of Article 25
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)
التعديلات المتعلقة برأس المال الإضافي من الفئة الأولى
أ- أي مبلغ يُقر به كتخفيض في حقوق ملكية كيان مشارك يقع في المملكة والذي يتعلق بالتوزيعات المدفوعة أو المستحقة بالنسبة لرأس المال الإضافي من الفئة الأولى يجب أن يعتبر كنفقة لأغراض تحديد دخل أو خسارة الكيان المشارك لتلك السنة المالية.
ب- أي مبلغ يُقر به كزيادة في حقوق ملكية كيان مشارك يقع في المملكة ويتعلق بالتوزيعات المستلمة أو المستحقة بالنسبة لرأس المال الإضافي من الفئة الأولى يجب أن يعتبر كدخل لأغراض تحديد دخل أو خسارة الكيان المشارك لتلك السنة المالية.
Source: Executive Regulations issued by Decision No. 172 of 2024, Legislation and Legal Opinion Commission (lloc.gov.bh).
What does the Article mean in plain language?
Additional Tier One Capital distributions have a specific treatment: a Bahrain entity's equity decrease for distributions paid or payable becomes an expense, while an equity increase for distributions received or receivable becomes income. This does not apply to every equity instrument. Establish the instrument definition, connect distributions to the entries and Fiscal Year, and prevent double recognition of amounts already included in accounting profit.
Financial reporting, tax, transfer-pricing and consolidation teams.
Reconcile issuer and recipient entries and the instrument's features before adjustment.
Applying the treatment to ordinary dividends or overlooking accrued distributions.
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Is this Article enough on its own?
Usually not. Read it with the connected Law Article, definitions, any effective election and current NBR guidance, especially for an amount or deadline.
Does NBR guidance replace the Regulations?
No. Guidance explains application and supports procedures and examples, but current legislation and decisions prevail in case of inconsistency.