Business
Bahrain: What you need to know about the country
Bahrain stands out for its liberal business environment and status as a financial hub for the MENA region.
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Overview
The absence of corporate income tax for most business sectors and a well-developed digital infrastructure make it attractive for startups and international companies. However, competition with Dubai and a limited domestic market—Bahrain’s population is 1.5 million—should be taken into account.
Sources of Law
- Sharia (applies to family and inheritance matters)
- International Treaties (as long as they do not contradict Sharia)
- Constitution
- Royal Decrees and Orders (Nizams): the main legislative instruments regulating a wide range of issues, including economy, trade, and public relations
Business Reforms
- Commercial Companies Law (2021) - simplified business registration, allowed 100% foreign ownership
- Bankruptcy Law (2018) - introduced fast-track restructuring procedures
- Intellectual Property - integrated into the international IP protection system, strengthened anti-piracy measures in line with WIPO standards
Trends
Economic Diversification
- Reduced dependence on oil: by 2024, oil’s share in GDP has decreased significantly
- Growth in financial services (20% of GDP) and tourism
Financial Sector Development
- Bahrain is a MENA leader in fintech: the Central Bank of Bahrain’s regulatory sandbox attracted 150+ fintech startups
- Headquarters of Citi, BNP Paribas, JP Morgan are located in Bahrain Fintech Bay
- Crypto licenses granted to Binance and CoinMENA
- Launch of the first Islamic bank (Bahrain Islamic Bank) and digital banks (ilaa Bank)
Tourism
- Simplified visa procedures
- Development of cultural tourism (Formula 1, Bahrain International Circuit)
Taxes
VAT
Bahrain has a 10% VAT. A 0% rate applies to certain supplies and export transactions outside GCC countries.
Corporate Income Tax
- Most companies in Bahrain are exempt from corporate income tax.
- However, there is a trend toward introducing taxation for more sectors.
Withholding Tax (WHT)
No WHT on dividends, interest, or royalties paid to non-residents.
Personal Income Tax (PIT)
- No PIT in Bahrain.
- However, employers must pay social contributions for employees when hiring staff.
A complete roadmap for launching and running a business in Bahrain — in our guide 'How to Do Business in Bahrain?'
In the guide, you will find not only basic information but also expert recommendations based on real cases and in-depth knowledge of the jurisdiction:
- Which types of businesses are best suited for Bahrain
- Key steps to launching a business in Bahrain
- The most common questions from our clients — and our answers
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Ready to discuss your project?
Leave a request, and we will contact you to clarify the details:
- We will select the right activity type and jurisdiction
- Outline all stages of company setup
- Provide clear timelines and project budget
