Parliament reviews Bahrain–Jersey tax treaty

TDT | Manama

Email : editor@newsofbahrain.com

Parliament has received a bill to ratify a Bahrain–Jersey tax treaty aimed at eliminating double taxation on income, following a royal decree issued on 29 October.

The agreement covers Bahrain’s corporate income tax and Jersey’s income tax, with scope to include similar future levies. It sets out how residents will receive relief for taxes paid in the other jurisdiction and includes a non-discrimination clause to ensure equal treatment of nationals and permanent establishments.

An article on information exchange obliges both sides to share data relevant to enforcing tax laws, with safeguards for confidentiality, public policy and bank secrecy.

Anti-abuse measures apply a principal-purpose test to prevent treaty shopping, though competent authorities may grant relief in justified cases.

The treaty also addresses capital gains, employment income, directors’ fees and student payments. Gains from immovable property or permanent establishments may be taxed where they arise; other gains are taxed in the seller’s state of residence.

For entry into force, both sides must complete domestic procedures. It will then apply to withholding taxes from 1 January of the following year, and to other taxes from the start of the next fiscal year. Either party may end the treaty after five years with six months’ notice.