Countering Harmful Tax Practices.
According to the new mandate, legal entities with commercial registration (CR) in Bahrain were required to locally maintain and report economic substance from 1 January 2019 on traders applying for new commercial registrations as well as CBB licensees. However, a transitional period of six months was granted for legal entities registered/incorporated prior to 1 January 2019.
The Economic Substance Legislation was issued to impose substantive economic requirements on legal entities carrying on relevant activities in or through Bahrain. It is Bahrain’s constructive response to concerns raised by the European Union Code of Conduct Group for Business Taxation regarding entities doing business in jurisdictions with low or near zero corporate tax rate or having no corporate tax regime, and Organization for Economic Co-operation and Development’s Forum on Harmful Tax Practices’ recommendations in connection with its Base Erosion and Profit Shifting (BEPS) Action 5: Countering Harmful Tax Practice
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