- Review all laws related to companies affairs periodically and suggest amendments that guarantee the attraction of new business and foreign investors.
- Receive the annual financial reports of the various types of companies registered in Kingdom of Bahrain and follow-up their legal and financial position.
- Represent the Ministry to attend meetings of the general assemblies for the shareholding and closed companies among others, and monitor performance of the boards of directors in the shareholding companies.
- Establish the principles of corporate governance in a manner that enhances safety and competitive economic environment of the Kingdom of Bahrain.
- Enhance the transparency of the business environment in the Kingdom of Bahrain by setting control procedures on companies to attract investments.
- Coordinate with the concerned bodies regarding anti-money laundering and illegal financing in the activities of the persons registered in the commercial registration in the Kingdom of Bahrain in order to enhance the safety of the business environment.
- Establish economic database covering all types of companies, which considered to be a reference for economic and commercial decision-making and provide reports, economic statistics and analysis.
- Enhance verifying requirements for economic substance of companies operating in the Kingdom of Bahrain according to the relevant laws, regulations and international obligations.
- Represent the Kingdom of Bahrain in regional and international forums of information exchange, economic substance as well as anti-money laundering and terrorism finance.
Economic Substance Requirements in the Kingdom of Bahrain
In order to meet the European Union criterion 2.2 and Base erosion and profit shifting (BEPS) Action 5 minimum standard, the Kingdom of Bahrain is required to impose economic substance requirements on entities that carry on geographically mobile business activities.
Therefore, the Ministry of Industry and Commerce (MOIC) has issued Ministerial Order number 106 of 2018 (MO 106) concerning Economic Substance requirements in the Kingdom of Bahrain.
The purpose of the ministerial order is to enhance economic substance requirements in the Kingdom of Bahrain and clarify the requirements for any Traders carrying out certain types of Relevant Activities in or through Bahrain (other than those activities undertaken by licensees of the Central Bank of Bahrain).
The ultimate goal of MO 106 is to prevent international businesses from benefiting from different tax laws between countries by artificially transferring profit to jurisdictions that impose little or no income tax.
Traders that must satisfy the Economic Substance Requirements
Any trader performing one or more of the relevant activities mentioned in MO 106, identified as follow:
- Distribution and service center activities
- Headquarters activities
- Holding company activities
- Leasing activities (other than those activities undertaken by licensees of the Central Bank of Bahrain)
- Shipping activities
- Intellectual property activities in Bahrain