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Bahrain Introduces Country-by-Country Reporting Requirements

The Kingdom of Bahrain has become the latest country to introduce country-by-country reporting (CbCR) requirements, in line with international financial regulations. The new rules will apply to all businesses with a legal entity or branch in Bahrain that are part of a multinational enterprise (MNE) group with annual turnover of BHD342 million (approximately US$907 million).

What is CbCR?

CbCR requires MNE groups to file a country-by-country report, providing financial information for each tax jurisdiction where the group has a presence. The aim is to enable tax authorities to assess high-level risks related to transfer pricing and base erosion and profit shifting (BEPS) for MNE groups.

Bahrain’s CbCR Rules

On February 4, 2021, Bahrain issued Ministerial Decision No. 28 of 2021, which introduces CbCR rules for MNE groups operating in the country. The new rules are in line with the OECD Model Legislation and require entities or branches located in Bahrain to file a CbC report and/or notification if they are part of an MNE group with at least BHD342 million consolidated group revenue.

Filing Requirements

Affected entities will need to submit a CbCR notification before the last day of their fiscal year, identifying whether they are the ultimate parent entity (UPE) or not. If they are not the UPE, the notification must include the identity and tax residence of the reporting entity.

  • First Bahraini Constituent Entity filing deadline: December 31, 2021
  • First Bahraini Reporting Entity filing deadline: December 31, 2022

Penalties for Non-Compliance

Failure to comply with CbCR obligations may result in administrative fines not exceeding BHD100,000 and/or suspension of commercial registration for a period not exceeding six months.

Next Steps

MNE groups with operations in Bahrain should assess their CbCR notification and filing requirements under the new rules and review their processes to ensure compliance with CbCR requirements in all relevant jurisdictions.