Bahraini Country by Country law

Bahraini Country by Country law

Page No 38

Count D: 3509 - Thursday 4 February 2021

Ministry of Industry, Commerce and Tourism

 

Resolution No. (28) for the year 2021

On the exchange of reports between relevant States.

Minister of Industry, Commerce and Tourism:

After reviewing the Commercial Companies Law, promulgated by Decree-Law No (21) for the year 2001, and its amendments,

And the Central Bank of Bahrain and Financial Institutions Law promulgated by Law No. (64) for the Year 2006, and its amendments,

And Decree-Law No. (27) of 2015 regarding the Commercial Registry, as amended by Decree No. (52) of 2018,

And Law No. (13) of 2018 approving the joining of the Kingdom of Bahrain to the agreement on the Mutual Administrative Assistance in Tax Matters, as amended under the 2010 Protocol,

And Law No. (1) of 2021 approving the joining of the Kingdom of Bahrain to the Multilateral Competent Authority Agreement on the exchange of reports between relevant States

And based on the offer of the undersecretary of the Ministry,

Hereby decide the following:

 

Article One

Definitions

In implementing the provisions of this Resolution, the following words and expressions shall have the meanings indicated next to each of them unless the context otherwise requires:

A- The Ministry: The Ministry concerned with trade affairs.

B- Resident: Any entity considered residing in a country for tax purposes.

C- Residency: Residency in a country for tax purposes.

D- The Report: The exchanged country-by-country report which must be submitted annually by the entity who is obligated to report in accordance with the provisions of this resolution and the instructions issued by the Organization for Economic Cooperation and Development, which is modified upon review from time to time.

E- The Group: A collection of enterprises related through ownership or control such that it is either required to prepare Consolidated Financial Statements for financial reporting purposes under applicable accounting principles or would be so required if equity interests in any of the enterprises were traded on a public securities exchange;

F- Multinational Enterprise (MNE) Group: Any Group that includes two or more enterprises the tax residence for which is in different jurisdictions, or includes an enterprise that is resident for tax purposes in one jurisdiction and is subject to tax with respect to the business carried out through a permanent establishment in another jurisdiction, and is not an Excluded Multinational Enterprise Group according to the provisions of this Resolution.

G- Excluded Multinational Enterprise Group: With respect to any Fiscal Year of the Group, a Group having total consolidated group revenue of less than 342 Million Bahraini Dinars during the fiscal year immediately preceding the Reporting Fiscal Year, as reflected in its Consolidated Financial Statements for such preceding Fiscal Year.

H- The Constituent Entity: Any of the following commercial establishments

  1. Any separate business unit of an MNE Group that is included in the Consolidated Financial Statements of the MNE Group for financial reporting purposes, or would be so included if equity interests in such business unit of an MNE Group were traded on a public securities exchange;
  2. Any such independent business unit that is excluded from the MNE Group’s Consolidated Financial Statements solely on size or materiality grounds;
  3. Any permanent enterprise of any separate business unit of the MNE Group included in the categories above provided the business unit prepares a separate financial statement for such permanent enterprise for financial reporting, regulatory, tax reporting or internal management control purposes.

I- The Ultimate Parent Entity: The Constituent Entity of an MNE Group that: (a) owns directly or indirectly a sufficient interest in one or more of the Constituent Entities of such MNE Group that is required to prepare the consolidated financial statements under accounting principles generally applied in its jurisdiction of tax residence, or would be so required if its equity interests were traded on public securities exchange in its jurisdiction of tax residence; and (b) there is no other Constituent Entity of such MNE group that owns directly or indirectly and interest described in subsection (a) above.

J- Reporting Entity: The Constituent Entity that is required to submit the Report in accordance with the provisions of his Resolution in its jurisdiction of tax residence on behalf of the MNE Group.

K- Fiscal year: The annual accounting period with respect to which the Ultimate Parent Entity of the MNE Group prepares its financial statements.

L- Reporting Fiscal Year: The Fiscal Year the financial and operating results of which are reflected in the Report stipulated in Article 5 of this Resolution.

M- Qualifiying Competent Authority Agreement: An agreement that is between authorized representatives of those jurisdictions that are parties to an International Agreement that requires the automatic exchange of Country-by-Country Reports between the party jurisdictions.

N- International Agreement: the Multilateral Convention for Mutual Administrative Assistance in Tax Matters, any bilateral or multilateral Tax Convention, or any Tax Information Exchange Agreement to which the Kingdom of Bahrain is a party, and that by its terms provides legal authority for the exchange of tax information between jurisdictions, including automatic exchange of such information.

O- Consolidated Financial Statements: The financial statements of an MNE group in which the assets, liabilities, income, expenses and cash flows of the Ultimate Parent Entity and the Constituent Entities are presented as those of a single economic entity

 

Article Two

Scope of application

With the exception of the Exempted Multinational Enterprise Group, the provisions of this Resolution shall apply to every Ultimate Parent Entity, including financial institutions licensed by the Central Bank of Bahrain, with effect from the Fiscal Year beginning on the first of January of the year 2021.

 

Article Three

Notification

A- Any Constituent Entity residing in the Kingdom of Bahrain must notify the Ministry whether it is the Ultimate Parent Entity no later than the last day of the Group’s Reporting Fiscal Year. The Ministry may extend the aforementioned deadline for the Fiscal Years that begin on or after the first of January for the year 2021. If the referenced Constituent Entity is not the Ultimate Parent Entity, that entity must notify the Ministry of the identity of the notifying entity and its place of residence no later than the last day of the Reporting Fiscal Year for that MNE Group at the latest.

B- The Ministry will specify the form and method for submitting the notification stipulated in this Article.

 

Article Four

The obligation to submit the Report

Each Ultimate Parent Entity residing in the Kingdom of Bahrain must submit a Report to the Ministry fulfilling the requirements set in Article 5 of this Resolution, for the Reporting Fiscal Year no later than twelve months after the last day of the Reporting Fiscal Year for the

 

Article Five

Contents of the Report

A- The Report in relation to the MNE Group shall contain the following:

1- Aggregate information relating to the amount of revenue, profits and losses before income tax, income tax paid, income tax accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents with regard to each jurisdiction in which the MNE Group operates.

2- An identification of of each Constituent Entity of the MNE Group setting out the jurisdiction of tax residence of such Constituent Entity, and where different from such jurisdiction of tax residence , the jurisdiction under the laws of which such Constituent Entity is organized, and the nature of the main business activity or the activities of such Constituent Entity.

B- The Report must be submitted in a format that matches the definitions and instructions contained in the schedule specified in Annex 3 of Chapter Five of the Transfer Pricing Guideline issued by the Organization for Economic Cooperation and Development which is amended from time to time.

C- The report stipulated in this Article shall be submitted in the manner specified by the Ministry.

 

Article Six

Confidentiality of the information

The Ministry maintains the confidentiality of the information contained in the Reports, to the same extent that applies if this information was provided to it under the provisions of an International Agreement.

 

Article Seven

Penalties

Without prejudice to the provisions of Article (19) of Decree-Law No. (27) of 2015 regarding the Commercial Registry, anyone who violates the provisions of this Resolution shall be punished with the penalties stipulated in the article (20) from the same Law.

 

 

Article Eight

Entry into force

The Undersecretary of the Ministry and those concerned - each in his own jurisdiction - shall implement the provisions of this Resolution and shall enter into force the day following the date of its publication in the Official Gazette.

 

 

Minister of Industry, Commerce and Tourism

Zayed bin Rashid Al Zayani

Issued on: 21 Jumada al-Thani 1442

Corresponding to: 3 February 2021

 

 

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