Outsourcing and the ES tests

The situation

ES tests look at core income generating activities and adequate resources in Bahrain. Outsourced activity is generally acceptable when done in Bahrain and supervised.

The law

• Economic substance rules: Ministerial Order No. 106 of 2018 and CBB Directive OG/499/2018: Entities carrying on relevant activities must show core income generating activity and management in Bahrain and lodge an ES return

What it means for you

Outsourcing to a Bahrain provider can count if you supervise it and can show the resources used. Outsourcing core activities abroad is a weak point. Keep contracts and oversight records.

What to do

1. Keep the outsourcing contract.
2. Record your supervision.
3. Show resources used in Bahrain.
4. Reflect it in the ES return.

Related

• Official guidance on Bahrain ES
• Do Bahrain economic substance rules still apply
• Missed ES return blocks CR renewal
• Which activities trigger Bahrain ES
• Bahrain ES return deadline
• CBB licensees and economic substance