Saudi Tax Treaty Approved by Parliament

TDT | Manama

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A bill putting Bahrain’s double taxation agreement with Saudi Arabia into effect was unanimously approved by Parliament, aiming to eliminate the risk of double taxation on cross-border income.

The agreement, linked to Decree No. 16 of 2026, was signed in Manama on December 3, 2025, and had earlier received backing from the Financial and Economic Affairs Committee.

MP Abdulwahid Qarata said the treaty would reduce financial burdens on Bahraini traders dealing with Saudi suppliers and help simplify cross-border trade.

He noted that Bahrain does not currently impose income tax, while Saudi Arabia applies a 15 per cent value added tax, which can increase costs for traders operating between the two markets.

The treaty covers individuals and companies in both countries and includes rules on business profits, property income, dividends, royalties, pensions, and other forms of income. It also provides mechanisms to resolve tax disputes, prevent double taxation, and exchange tax-related information between authorities.

Saudi investments in licensed Bahraini companies exceed BD2 billion, while thousands of Saudi-linked businesses operate across Bahrain. Officials hope the agreement will strengthen trade ties and encourage further investment between the two countries.