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April 20, 2020

Bahrain issues guidance on Mutual Agreement Procedure

Executive summary

On 1 April 2020, the Bahrain National Bureau of Revenue issued guidance to help taxpayers and Competent Authorities (CAs) to use the Mutual Agreement Procedure (MAP) in resolving double tax treaty (DTT) disputes. The guidance supports Bahrain’s commitment to implement the minimum standards of the OECD1 BEPS2 Action Plan.

Detailed discussion

Background and purpose of the guidance

The Final BEPS Report issued in 2015 contains measures that governments should implement to address the challenges of taxation in highly globalized economies. Action 14, one of the four minimum standards, is related to resolving international tax disputes through MAP.

MAP allows taxable persons to present their case to the CA of either of the countries that signed a DTT, if the person considers that the action taken by either country results or will result in taxation that is not in accordance with the provisions of the DTT.

The purpose of the issued guidance is to define steps, procedures and minimum requirements for initiating and conducting MAP.


MAP can be initiated with respect to transfer pricing cases, anti-abuse provision claims, multilateral disputes and multi-year resolution cases.

MAP can be initiated if the following conditions are met:

  • The issue or transaction relates to jurisdictions with which Bahrain has a DTT.
  • It is apparent that the action resulted or will result in taxation that is not in accordance with the DTT.
  • The MAP request is made within the deadline set out in the DTT.

All DTTs concluded by Bahrain to date contain MAP provisions.

High level steps and timeline for MAP

MAP requests must be submitted within the time limits specified in the DTT using a five-step process.

The Bahrain CA has up to 90 days to determine if the request is eligible to be processed for MAP purposes. The Bahrain CA will aim to resolve MAP cases within two years of receiving an application.

The guidance also provides a minimum level of detail that the MAP request should contain including additional requirements for transfer pricing and withholding taxes.


The purpose of DTTs is to support international trade by reducing double taxation. MAP is a process that encourages DTT partners to reach a consensus on double taxation issues. Bahrain’s new rules set out a process that taxpayers may follow to seek the CA’s involvement in resolving DTT issues.

Issuance of guidance represents another step in Bahrain’s commitment to follow the international consensus on global tax policy.


  1. Organisation for Economic Co-operation and Development.
  2. Base Erosion and Profit Shifting.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Middle East, Manama
Ernst & Young LLP (United States), Middle East Tax Desk, New York



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