The National Bureau for Revenue has issued guidance on the market value to be applied between related parties.
The market value is the fair price tradeable in the open market between two independent parties under similar circumstances at the same date as the date of the supply and in accordance with the following free competition conditions:
- Neither the supplier nor the customer is subject to any kind of commercial pressure
- Both the supplier and the customer independently work to achieve what is in their best interest
- The transaction is made within a reasonable period of time (i.e., no time pressure)
Where the market value cannot be determined in accordance with the fair price tradeable, the NBR expects this to be determined based on the methodologies set out in the guidelines issued by the Organization for Economic Cooperation and Development (OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations). The methodologies should be used notwithstanding that the parties involved may both be resident in Bahrain.
Source NBR
