DT3052 - Double Taxation Relief Manual: Guidance by country: Bahrain: Treaty summary

The table summarises the provisions of the treaty as they relate to income beneficially owned by UK residents. The rate shown is the ‘treaty rate’ and does not reflect taxes chargeable under domestic law before relief is given under the provisions of the treaty. The ‘treaty rate’ is the maximum rate at which Bahrain is permitted to tax income in the relevant categories under the treaty. Rates chargeable under domestic law may be higher or lower.

In all cases other conditions for relief (e.g. beneficial ownership) will have to be met before relief is due under the treaty. The text of the treaty itself should be consulted for the full details. The text of the treaty can be found on gov.uk.

Subject	Comments	Article
Portfolio dividends	0%	10
Dividends on direct investments	0%	10
Property income dividends	15% (Note 1)	10
Interest	0% (Note 2)	11
Royalties	0%	12
Government pensions	Taxable only in Bahrain unless the individual is a resident and national of the UK	18
Other pensions	Taxable only in the UK	17
Arbitration	Yes	23

Note 1: Dividends are generally taxable only in the state of residence of the beneficial owner of the dividends.

The only exception is in respect of dividends paid by property investment vehicles (such as UK Real Estate Investment Trusts) when source state taxation (i.e. taxation by the state in which the company paying the dividends is a resident, in accordance with domestic law) of 15% is permitted, unless the beneficial owner of such dividends is a pension scheme, in which case the dividends will be exempt from source state taxation.

Note 2: Although the agreement allows for source state taxation (i.e. taxation by the state in which the interest arises, in accordance with domestic law) there are many exemptions listed in paragraph 3 of Article 11, which make the interest taxable only in the state of residence of the beneficial owner of the interest.