The Issuance of Country-by-Country reporting guidance for MNE Groups


On 4 February 2021, the Ministry of Industry, Commerce, and Tourism issued Ministerial Decision no. 28/ 2021, setting out Country-by-Country Reporting (CbCR) obligations for multinational enterprise groups (MNE groups) headquartered and/or operating in the Kingdom of Bahrain. These obligations are effective for the financial years commencing on or after 1 January 2021.

This occurred after the Kingdom of Bahrain ratified and published the Multilateral Competent Authority Agreement (MCAA) on the exchange of Country-by-Country (CbC) reporting in the Official Gazette on 28 January 2021. For more details, you can refer to our previous alert on the issuance of CbCR obligations by following this link.

The Kingdom of Bahrain has recently issued guidance for the submission of the CbC Report. We note that the website of the National Bureau of Revenue (NBR) outlines under Action 13 that CbC Reporting is “coming soon”. Nevertheless, we can confirm that an option to submit the CbC Report has been added to the International Tax Information Exchange System (ITIES) portal. This is the same portal that is utilized for Foreign Account Tax Compliance Act (FATCA), Economic Substance, and Common Reporting Standard (CRS). The guidance can be found upon registering to the portal or at the link provided below.

Key comments

The newly issued guidance indicates that only MNE groups headquartered in Bahrain will be required to submit a CbC Report and Notification. As per Article 3(a) of Ministerial Decision no. 28/ 2021, MNE groups headquartered outside of Bahrain were previously required to submit CbC notifications for all their Bahrain constituent entities. According to the current available information on the ITIES portal, it can be interpreted that CbC Notification may not be required for Bahrain Constituent Entities of Groups headquartered outside of the Kingdom. This is also consistent with the OECD peer review report on Country-by-Country
published on October 18, 2021 which outlines that Bahrain is a non-reciprocal jurisdiction, meaning it will not receive CbC reports submitted to tax authorities in other jurisdictions. This is similar to the approach followed by the United Arab Emirates (UAE) which is also a non-reciprocal jurisdiction and CbC Notification is also not required for non-UAE headquartered groups.

There may be an announcement from the Ministry of Industry, Commerce, and Tourism. We will be monitoring any upcoming announcements in order to outline any additional requirements with respect to CbCR for constituent entities residing in Bahrain.  Should there be any further developments, we will ensure to release another update. 

Next steps

Bahrain headquartered MNE groups:

CbC Report: MNE groups with total consolidated revenues greater than Bahraini Dinar (BHD) 342 million will be obligated to submit their first CbC Report by no later than twelve months after the last day of the reporting Fiscal year of the MNE Group. (i.e. for fiscal year ending 31 December 2021, the report should be submitted by 31 December 2022).

CbC Notification: The CbC Notification should be filed alongside the CbC Report i.e (i.e. for fiscal year ending 31 December 2021, the first Notification should be submitted by 31 December 2022). 

Penalties: In case of non-compliance with the Cabinet Resolution, administrative penalties ranging from BHD 1,000 – 100,000 will apply. 

Non-Bahrain headquartered groups:

No action is required.

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