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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Bahrain Phase 2 Peer Review

This report for Bahrain has been published on 22 Nov 2013. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   Foreign companies carrying on business in Bahrain must register with the Registrar of companies, but the ownership information provided does not need to be updated and neither does the MOIC check whether foreign companies keep a register of shareholders. The AML rules only ensure the availability of ownership information on shareholders holding at least 20% of the shares.   Bahrain should ensure that ownership information is available on all foreign companies having their head offices or headquarters in Bahrain.  
While legal obligations exist for trustees of financial trusts to maintain identity information, their enforcement started only recently.   The Bahraini authorities should continue to regularly take appropriate measures to ensure that Central Bank licensees acting as trustees meet their obligations under the Financial Trust Law and their anti-money laundering obligations to maintain all relevant identity information on Bahraini financial trusts. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Underlying documentation is not expressly required to be kept for financial trusts. In addition, whereas financial trusts have to maintain books and records, there is no express obligation for licensed trustees of Bahraini financial trusts to keep these books and records for a minimum period of time in all cases.  Bahrain should ensure that financial trusts maintain underlying documentation. Additionally, Bahrain should also ensure that financial trusts maintain all their accounting documents for five years or more. 
Phase 2 Rating Factors Recommendations
Partially Compliant.   The provisions requiring the availability of accounting information in partnerships and foreign entities are not enforced in practice.  The Bahraini authorities should ensure that partnerships and relevant foreign entities keep reliable accounting records.  
Whereas legal obligations exist for trustees of financial trusts to maintain accounting information, it is not clear that all relevant information is available in practice.   The Bahraini authorities should take appropriate action to ensure that financial trusts implement their obligations to keep reliable accounting records, including underlying documentation, for at least five years.  
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Access to foreseeably relevant information in Bahrain for exchange of information purposes is implied from the status of treaties under Bahrain’s Constitution rather than a clear statutory provision, and has not been tested in practice. The Government is working towards introducing some statutory provisions to give the competent authority full access powers to all foreseeably relevant information.  Bahrain should pursue its legislative work aimed at introducing express statutory provisions dealing with access to information for exchange of information purposes. 
Phase 2 Rating Factors Recommendations
Largely Compliant.   The Central Bank has not adopted internal procedures or guidelines on how to handle EOI requests and does not appear fully prepared to deal with the range of requests that may arise.  The Bahraini authorities should ensure that the Central Bank is fully prepared for the range of requests that may be received. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.   Bahrain is actively negotiating a number of new TIEAs, DTCs and protocols.  Bahrain should continue to develop its network of EOI mechanisms (regardless of their form) with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.      
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Largely Compliant.   Bahrain has committed resources and has in place organisational processes for exchange of information that appear to be adequate for dealing with incoming EOI requests. Bahrain did not process any EOI requests during the three-year period under review. Consequently, the organisational processes have not been sufficiently tested in practice.  Bahrain should monitor the practical implementation of the organisational processes of the competent authority as well as the level of resources committed to EOI purposes, in particular taking account of any significant changes to the volume of incoming EOI requests, to ensure that both the processes and level of resources are adequate for effective EOI in practice.