Bahrain Legal Update

Law Number (4) of 2018 Ratifying the Agreement between the Government of the Kingdom of Bahrain and the United States of America (USA) to Improve International Tax Compliance and to Implement FATCA, and its Annexes I and II.

Overview

It is an Agreement concerning the improvement of International Tax Compliance and implementing Foreign Account Tax Compliance Act (FATCA). It has its basis on internal reporting, and automatic exchange, subject to the confidentiality and other protections, including the clauses limiting the usage of the information exchanged was between the Government of the United States of America (the USA) and the Government of the Kingdom of Bahrain (Bahrain).

What the Agreement Entails?

The agreement consists of 12 Articles

As per Article 12 (1), it shall come into force on the date of written notification from Bahrain to the US that all internal processes have been completed to ensure that all standards and specifications are met to entail the procedure. Article 2 states that Bahrain shall be responsible for obtaining information from all reportable financial institutions on the name, address and US TIN of each US account holder. It will also apply to Depository accounts and Custodial accounts. As per the Article 3 of the Agreement, the information obtained is to be exchanged automatically on an annual basis, and the amounts may be definite by the principles of the tax laws of Bahrain. Further to this, the currency in which the information is delivered should be identified. This Article also discusses the time and manner in which the data is to be collected and shared. Regarding the general collaboration, if the Competent Authority of either party wishes to set forth or alter any terms, Article 5 (1) states that a follow-up request may be made by the US competent Authority, under which the Bahrain Authority shall provide additional information relating to a US reportable account. Article 5 (2) states that if the US Competent Authority believe any minor or administrative errors have occurred, they shall notify the relevant...