Calculation Steps
Step 1: Financial Accounts
Start with net income/loss per financial accounts used for UPE consolidated statements. Must be IFRS, local GAAP, or acceptable standard. Bahrain entities typically use IFRS.
Step 2: Adjustments
Add back: Net tax expense, dividends received (excluded), equity gains/losses on qualifying interests, asymmetric foreign currency gains/losses, policy disallowed expenses, prior period errors.
Step 3: Excluded Income
Remove: International shipping income, excluded dividends, excluded equity gains, excluded insurance company income. These items are carved out of GloBE income.
Step 4: SBIE Deduction
Substance-Based Income Exclusion: 5% of tangible asset book value + 5% of payroll costs. This amount is excluded from excess profit subject to top-up tax. Encourages real economic activity in Bahrain.