Bahrain plans to introduce new fiscal reforms aimed at bolstering public finances, with measures from increasing fuel prices to establishing a corporate income-tax law.
The Gulf nation will raise electricity and water tariffs, increased dividends from state-owned companies to support the public budget and enact a 20 per cent cut in administrative spending across all government agencies, Bahraini media reported on Monday.
A corporate income tax of 10 per cent will be imposed on companies with revenue exceeding one million Bahraini dinars ($2.6 million), or annual net profit exceeding 200,000 dinars. The law is expected to take effect in 2027, following the required approvals.
Last month, the International Monetary Fund highlighted Bahrain's rising government debt and urged the kingdom to adopt fiscal measures.
IMF staff said Bahrain's fiscal position “continued to deteriorate last year”, with the kingdom’s overall deficit rising to 11 per cent of GDP and gross government debt climbing above the same level.
Also in November, S&P Global downgraded Bahrain’s sovereign credit rating from “B+” to “B,” citing the risks posed by high government debt, persistently strained fiscal positions and large deficits. The agency, however, maintained a stable outlook.
Despite these challenges, the government has raised $5 billion from global debt markets throughout the year, benefiting from strong investor demand, particularly for sukuk, Reuters reported.
