Document retention is vital for business success and compliance in Bahrain, ensuring financial transparency and legal adherence.
Navigating the various laws and regulations governing document retention can be overwhelming. Join us as we explore the recommended retention periods, uncover the importance of document retention, and discover how Crown Records Management Bahrain can assist you in storing, digitizing, and securely destroying your documents.
In this article, we will discuss the following:
- Which records should be maintained
- Specific retention periods for different documents
VAT Records: 10-15 years
General Records & Accounting Books: Previously, a VATable person was required to maintain relevant records for a period of 5 years after the end of the VAT period to which they relate. However, starting from 2024*, Bahrain’s National Bureau for Revenue (NBR) has extended the period to retain records and accounting books for an additional five years on top of five years after the end of the VAT period to which they relate or from the end of the VAT period where the adjustment period ends (for capital assets) making the Retention Period of Records and Accounting Books 10 years.
Real Estate Records: Must be maintained for 15 years after the end of the VAT period to which they relate. The NBR may notify the VATable person to retain these records for a longer period, without this additional period exceeding five years.
Business Transfer or Merger: Where a VATable person ceases to carry out VATable activities because of a transfer of business or a merger, they will still be required to retain the related records in accordance with the VAT Law.
Bankruptcy/Insolvency: If a VATable person is declared bankrupt, or in the event of insolvency, legal representatives must retain records for at least 12 months after proceedings conclude.
*For more details, visit: https://www.nbr.gov.bh/publications/view/VAT_General_guide
Commercial Companies Records: 10 Years
General Requirement: Company books and documents must be maintained for ten years from the date of deregistration from the Commercial Registry.
Merchant Records: Every merchant, whether an individual or a company, must maintain commercial books that reflect the financial position and obligations of the business for at least 10 years.
Accuracy and Submission: Merchants are responsible for the accuracy and integrity of their commercial books, bookkeeping, and submission of these records upon request to the Ministry of Industry and Commerce.
Medical Records: 3-24 years
General Medical Records: Medical records are vital for ensuring patient care and meeting national legal requirements. They must be retained as inactive records for a minimum of three years from the date of the last visit of the healthcare recipient, in accordance with the statute of limitations in Bahrain.
Archived Records: After being inactive for three consecutive years, records may be archived. These archived records must then be retained for an additional seven years, making the total retention period 10 years.
Minor’s Medical Records: Records for minors must be maintained until the child reaches 21 years of age, plus an additional three years as per the statute of limitations. This brings the total retention period to 24 years.
Employee Records: 2-10 years
General Records: Employee records, including payroll records, timesheets, and performance reviews, play a crucial role in managing human resources and ensuring compliance with labor regulations in Bahrain. It is recommended to retain these records for at least 2 years after an employee leaves the company.
Extended Retention: In cases where an employee suffers a work-related accident or files a claim against the business, it is advisable to retain the relevant records for up to 10 years after the claim is resolved. This extended retention period helps in addressing any legal issues or claims that may arise.
Financial and Compliance Records: 5-10 years
Central Bank of Bahrain (CBB) Records[1]:
General Requirement: According to Articles 59 and 60 of the CBB Law, all conventional bank licensees must maintain books and records, whether in electronic or hard copy form, that are sufficient to produce financial statements and show a complete record of the business undertaken.
Retention Period: These records must be retained for at least 10 years as specified by Article 60 of the CBB Law.
Anti-Money Laundering (AML) and Know Your Customer (KYC) Records[2]:
General Requirement: Bahrain’s Anti-Money Laundering framework, established under the ‘Anti-Money Laundering Law 2001’, requires a risk-based approach, customer due diligence (CDD) measures, reporting of suspicious transactions, and adherence to policies and procedures for record retention.
Retention Period: Financial records must be retained for five years as part of AML and KYC obligations for due diligence.
Third-Party Processing: If the information is processed, collected, and managed by a relevant third party, the ultimate owner of the data is responsible for collecting all necessary information from the third party without undue delay.
Compliance Records: Ongoing Retention
Compliance records are directly linked to industry-specific regulations and ensure adherence to legal requirements. Documents such as environmental permits and safety records should be kept for as long as the company is subject to the relevant regulations. This ongoing retention helps demonstrate compliance and allows for historical reference during inspections or audits.
Ownership Records: Indefinite Retention
Certain vital documents should be retained permanently by businesses. These include business formation documents, annual meeting minutes, by-laws, stock ledgers, and property deeds. By keeping these documents, companies ensure a reliable and enduring record of their formation, governance, ownership, and valuable property assets for future reference, compliance, and analysis.
Factors Influencing Document Retention Periods:
- Industry or Location Specific Regulations:
Different industries may have specific regulations dictating extended retention periods for certain documents. For example, financial institutions might be required to retain records for 7 years, while healthcare providers may have a 10-year-plus retention requirement.
- Business Size:
The size of a business can impact document retention periods. Larger businesses often have more extensive record-keeping requirements due to their scale of operations. They may be required to retain records for longer periods compared to smaller firms. Understanding the specific retention requirements for your business size is essential for compliance.
- Likelihood of Litigation:
Businesses involved in litigation may need to retain records for longer periods as potential evidence. If there is a high likelihood of litigation, it is prudent to extend the retention period to preserve relevant documents that may be required for legal proceedings.
Need Support?
Managing document retention can be a complex task for businesses; with varying retention periods and the need to comply with industry-specific regulations, it becomes crucial to have a reliable partner to assist in this process. That’s where Crown Records Management Bahrain comes in.
Whether you require secure physical storage, efficient document digitization, or secure destruction once the retention period is over, Crown RMS has the expertise and resources to support you. With our trusted services, you can ensure proper records managment while maintaining compliance and freeing up valuable space within your organization.
Contact us today to learn more about how we can help.
*Please note that laws and regulations regarding document retention can evolve over time. The time periods outlined in this article should serve as general guidelines, but it is essential to consult with the relevant authorities to ensure compliance based on your specific circumstances.
[1] Entire Section | Rulebook (thomsonreuters.com)
[2] Bahrain – AML KYC Regulations (shuftipro.com)
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