Country-by-Country Reporting in Bahrain: Are You In Scope?

Scope threshold

EUR 750m

Effective from

January 2021

Standard

OECD Action 13

Filing portal

ITIES (NBR)

Also on ITIES

ESR, FATCA, CRS

What CbCR is for

Country-by-Country Reporting gives tax authorities a standardised view of how a multinational group's revenue, profit, tax, assets, employees and stated activities are distributed across jurisdictions. It is a transfer pricing risk assessment tool, not a tax computation.

That distinction matters. The CbC report does not determine anyone's tax liability. What it does is show where the numbers look unusual — high profit in a low-substance jurisdiction, or substantial revenue with few employees — which is exactly the profile that prompts a transfer pricing enquiry.

Who is in scope

Scope follows the same test as the DMTT: an MNE group with consolidated revenue of EUR 750 million or more. Bahrain's rules apply to businesses or branches in Bahrain that are part of such a group.

Within an in-scope group, the obligation is allocated by role:

The notification obligation is the one most often missed. A Bahrain subsidiary whose European parent files CbCR in Germany still has to tell the NBR that fact. Silence is a filing failure even where the report itself is properly lodged elsewhere.

What the report contains

The CbC report has three tables, in the OECD standard format.

Table 1 is jurisdictional: for each tax jurisdiction, the group's revenue (split between related and unrelated parties), profit or loss before tax, income tax paid and accrued, stated capital, accumulated earnings, employee headcount, and tangible assets other than cash and equivalents.

Table 2 lists every constituent entity by jurisdiction, with its main business activities.

Table 3 carries additional information — material data sources, differences between accounting frameworks, and any explanations the group considers necessary.

Filing through ITIES

Bahrain administers CbCR through the International Tax Information Exchange System, the same NBR portal used for Economic Substance returns, FATCA and CRS reporting.

1. Register the entity on ITIES. Registration is separate from any other NBR or MOIC account you may hold.
2. Determine the group's reporting role — who is the Ultimate Parent Entity, and whether it files in Bahrain or elsewhere.
3. File the notification identifying the reporting entity and its jurisdiction of residence.
4. File or exchange the CbC report where the Bahrain entity is the reporting entity.
5. Reconcile to the consolidated accounts. The report must tie to the group's audited financial statements.

Same portal, same deadline pressure Economic Substance Regulations in Bahrain: the full compliance checklist →

Why CbCR now drives the DMTT

This is the development that has made CbCR considerably more consequential than it was on introduction.

The Transitional CbCR Safe Harbour under Pillar Two allows a group to treat its top-up tax in a jurisdiction as nil for a transitional period, provided the jurisdiction passes one of three tests using country-by-country reporting data:

• De minimis test — average CbCR revenue below the threshold and average pre-tax income below its threshold.
• Simplified effective tax rate test — the CbCR-based effective rate meets or exceeds the transitional rate for the year.
• Routine profits test — pre-tax income does not exceed the substance-based income exclusion.

Where any of the three passes, the jurisdiction's top-up is deemed nil and the full GloBE computation is not required for that year. That removes both the calculation burden and the quarterly advance payments.

The regime it feeds Bahrain's 15% Domestic Minimum Top-Up Tax: who it applies to →

The compliance checklist

1. Test group revenue against EUR 750 million annually, and document the conclusion whether or not you are in scope.
2. Identify the Ultimate Parent Entity and confirm where it files. Do not assume — group reorganisations change this.
3. File the Bahrain notification even where the report is filed abroad. This is the obligation most often omitted.
4. Register on ITIES before the filing window opens rather than during it.
5. Build jurisdiction-level data extraction that reconciles to the consolidated accounts, rather than assembling Table 1 from estimates.
6. Review Table 1 for anomalies before filing — high profit with low headcount or low tangible assets in a jurisdiction will attract attention.
7. Align CbCR, DMTT and transfer pricing documentation so all three tell the same story. Inconsistency between them is the most common source of challenge.
8. Assess the safe harbour using actual CbCR data each year, and document which test was relied on.

CbCR and transfer pricing

CbCR is designed for risk assessment, and it is used that way. A tax authority reviewing Table 1 is looking for the mismatch between profit and substance.

That means the CbC report and the transfer pricing documentation must be consistent. If Table 1 shows substantial profit in Bahrain supported by limited employees and assets, the transfer pricing file needs to explain why — functional analysis, risk allocation, and the basis on which returns were attributed. Where the two documents diverge, the group has created its own enquiry.

The companion obligation Transfer pricing in Bahrain: documentation rules GCC groups can't ignore →

General information only, not tax advice on specific facts. Requirements reflect Bahrain's CbCR rules effective January 2021 and the OECD Action 13 standard as understood at the date of publication. Group reporting roles should be confirmed on current group structure and residence.