Economic Substance Regulations
AM Consulting offers expert guidance and end-to-end ESR compliance services. With deep
knowledge of Bahrain’s regulatory environment and extensive practical experience, we are your
trusted partner in navigating the complexities of Economic Substance Regulations.
In Bahrain, all businesses registered with a Commercial Registration (CR) are required to comply
with ESR. These regulations ensure that entities conducting certain business activities
demonstrate substantial economic presence and operations within Bahrain.
Core Income-Generating Activities (CIGA) Under ESR
Distribution and Service Centers
Headquarters
Holding Companies
Leasing & Shipping
Financing Companies
Intellectual Property (IP) Holding
Financing Companies
Banks & Insurance
Certain Investment Firms
Economic Substance Test & Requirements
To comply with the Economic Substance Test, entities must ensure the following:
- Conduct relevant Core Income Generating Activities (CIGA) in Bahrain.
- Maintain an adequate number of qualified full-time employees, physical offices, and operating expenses in the country.
- Ensure that management is physically present in Bahrain, with an appropriate number
of Board of Directors meetings held locally and strategic decisions made and documented in Bahrain. - Ensure that the Board of Directors possesses the necessary knowledge and authority to make strategic business decisions.
- Failure to meet these requirements may result in penalties, including fines, suspension of commercial registration, or criminal prosecution.
Regulatory Authorities
Consequences of Non-Compliance
Non-compliant entities could face the following actions:
- Warning Notices
- Suspension of Commercial Registration (CR)
- Criminal Prosecution
- Penalties of up to BD 1,000 per day
- Striking off from the CR
Our ESR Compliance Services
ESR Classification and Assessment
We review your business activities, determine ESR applicability, and ensure accurate classification for a clear and compliant approach.
ESR Reporting and Notification
We manage ESR reporting and notifications, ensuring every submission is accurate, timely, and fully aligned with regulatory requirements.
ESR Compliance
We create tailored ESR compliance plans designed around your operations, helping your business meet all mandated regulatory expectations smoothly.
Record-Keeping and Documentation
We maintain organised ESR documentation, ensuring your business stays prepared for regulatory audits, reviews, or compliance-related inquiries anytime.
