Bahrain - NBR Releases First Edition of DMTT Transfer Pricing Guide

On 8 June 2026, the National Bureau for Revenue ("NBR") of the Kingdom of Bahrain published the first version of the Domestic Minimum Top-Up Tax Transfer Pricing Guide ("TP Guide"). This is the first standalone TP Guide issued under Bahrain's DMTT regime and represents a significant step in Bahrain's implementation of the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Global Anti-Base Erosion ("GloBE") framework.

The TP Guide is aligned with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2022 edition) ("OECD TP Guidelines") and should be read alongside the DMTT Law (Decree-Law No. (11) of 2024) and its Executive Regulations (Decision No. (172) of 2024). The NBR notes that the guide is non-binding and informational in nature, but it will serve as the primary indicator of how the NBR interprets and applies TP rules under the DMTT regime.

Key highlights

Scope of TP requirements under the DMTT

The TP Guide confirms that TP requirements apply to members of Multinational Enterprise (“MNE”) Groups that are in scope of the DMTT Law — that is, Groups with global consolidated revenues of at least EUR 750 million in at least two of the four preceding fiscal years. The following key scoping points are confirmed in the TP Guide:

• Cross-border transactions: All transactions and arrangements between Constituent Entities ("CEs"), Joint Ventures ("JVs") and JV Subsidiaries located in different jurisdictions within the same MNE Group must comply with the Arm's Length Principle for the purpose of determining the CEs Income or Loss.
• Domestic transactions: Transactions or arrangements between entities located entirely within Bahrain are generally not within the scope of the TP requirements. However, where CEs that are members of the same MNE Group are both located in Bahrain, any loss arising from a sale or transfer of an asset between them must be adjusted to reflect the Arm's Length Principle for DMTT purposes. This rule also applies to transactions between a CE and a JV or JV Subsidiary located in Bahrain where they are members of the same MNE Group.
• Permanent establishments: The same arm's length adjustment obligations apply to Permanent Establishments ("PEs") and their main entities to allow appropriate profit or loss attribution among the entities for DMTT purposes.
• Definition of related parties: For the purposes of the TP Guide, "related parties" include not only Bahrain-based CEs, JVs and JV Subsidiaries, but also entities located in other jurisdictions that are members of the same MNE Group.

Arm’s Length Principle

The TP Guide requires that the CE Income or Loss of every in-scope entity reflects the Arm's Length Principle. Group entities must be treated as independent enterprises when pricing transactions between them for DMTT purposes. Alignment with the Arm’s Length Principle can be demonstrated with the help of the following:

• Comparability analysis: A comparability analysis involves accurately delineating a controlled transaction and comparing its conditions to those of comparable uncontrolled transactions. The TP Guide identifies five comparability factors:
  • Contractual terms of the controlled transaction or arrangement;
  • Functions performed, assets used, and risks assumed (“Functional Analysis”);
  • Characteristics of the property transferred or services provided;
  • Commercial and economic circumstances of the parties and the market; and
  • Business strategies pursued by the parties
• TP methods: The Executive Regulations, consistent with the OECD TP Guidelines, prescribe five TP methods for determining arm's length pricing under the DMTT:
  • Comparable Uncontrolled Price method
  • Resale Price Method
  • Cost Plus Method
  • Transactional Net Margin Method
  • Profit Split Method

TP documentation

Entities in Bahrain that are party to a transaction or arrangement with another related party of the same MNE Group must prepare and maintain both a Local File and a Master File, as prescribed in the Executive Regulations and the TP Guide. The purpose of the documentation is to demonstrate adherence to the Arm's Length Principle. The TP Guide sets out the contents of the Local File and Master File, which are in line with contents requirements in the OECD TP Guidelines.

Key compliance deadlinesThe TP documents for the Bahrain-based CE (Local File and Master File) should be maintained annually and should be provided upon request from the NBR.

Recommendations for businesses

• Domestic asset transfers: While the TP Guide clarifies that purely domestic transactions between Bahrain-based CEs are generally not subject to TP requirements under the DMTT, the exception for losses on intra-Bahrain asset sales and transfers is a targeted anti-avoidance measure that Groups undertaking restructurings or asset movements within Bahrain should carefully review.
• Impact on GloBE income and ETR: TP adjustments under the DMTT do not affect a conventional corporate income tax base — they adjust Constituent Entity Income or Loss, which is the foundation of the GloBE Effective Tax Rate (“ETR”) calculation. An upward TP adjustment (reflecting understated income) will reduce the ETR of the Bahrain-based CE, potentially pushing it below the 15% threshold and triggering a top-up tax liability. Groups should model the ETR sensitivity of their Bahrain CEs to TP adjustments before the FY2025 DMTT return is filed.
• Functional analysis: The TP Guide places equal weight on functional analysis and comparability analysis as prerequisites for demonstrating compliance with the Arm's Length Principle. Groups with intercompany financing, management services, or IP arrangements should especially ensure the pricing policies are aligned with the functional profile of the entities involved in the transaction.
• Comprehensive and transaction-specific documentation: The contents of the Local file and Master File as prescribed in the TP guide are consistent with the documentation requirements under OECD BEPS action 13. Attention should be paid to the requirement to include copies of all material intercompany agreements and any Advanced Pricing Agreements (“APAs”) or tax rulings relevant to transactions with Bahrain-based CEs.

How Deloitte can help

Deloitte has extensive experience across Bahrain and the wider GCC in advising on DMTT and TP matters, including:

• DMTT scoping and applicability assessments
• TP readiness assessment / health checks
• Formulating TP policy / TP governance framework, including benchmarking and comparability analysis
• Preparation of Local File and Master File documentation aligned with the TP Guide
• Review of intercompany agreements
• Support in NBR enquiries and TP documentation reviews

For a detailed analysis or any assistance, please feel free to contact our tax professionals listed below.