Economic Substance Regulations (ESR) in Bahrain

The Ministry of Industry, Commerce and Tourism (“MOICT”) introduced a Resolution No. (106) of 2018, regarding the requirements of validating the actual economic substance of entities’ activities in the Kingdom of Bahrain (“Resolution”). The Resolution prescribed the requirements to be met by entities in Bahrain in terms of economic substance in Bahrain (the “Rules”).

The MOICT have also published detailed guidance notes with the aim of serving as a preliminary guide to relevant entities on the scope and application of the Rules (the “Guidance Notes”).

The Guidance Notes reconfirm that the Rules apply to commercial entities in Bahrain which engage in the following commercial activities (“Relevant Entities”):

  • Distribution and service centre activities
  • Headquarters activities
  • Holding company activities
  • Leasing activities (other than those activities undertaken by licensees of the CBB
  • Shipping activities
  • Intellectual property activities in Bahrain
 

The Guidance Notes however re-clarify that commercial entities which engage in the following commercial activities regulated by the Central Bank of Bahrain (“CBB”), are required to abide by the CBB Directive (OG/499/2018)

  • Banks (covered in CBB’s directive)
  • Financing companies (covered in CBB’s directive)
  • Insurance (covered in CBB’s directive)
  • Investment Business Firms (covered in CBB’s directive)
  • Fund Administrators (covered in CBB’s directive)
 

QUANTUM AUDITING provides the following services related to ESR:

  • Continue monitoring the announcements closely and keep clients updated
  • To have primary check for business on the applicability of ESR
  • To provide step by step guidance regarding further ESR requirements
  • Providing suggestions and improvements to ensure the compliance of Law
  • To file an Economic Substance return for the Reportable Period (where required)
 

Quantum Auditing offers support to the business community in the Kingdom of Bahrain with diligence in compliance with Economic Substance Regulations. We are well placed to assess the impact of the Rules on your organisation and assist you in complying with the Resolution, including working with you to complete and submit the required ESR Annual Return.

For ESR related enquiries: Email: info@quantumauditing.com Mobile: +973 3812 6243