Forming a company in Bahrain offers excellent access to the GCC states as well as Bahrain’s expanding network of over 30 double tax agreements with key partners, which is further supplemented by bilateral investment treaties and free trade agreements.
Bahrain imposes no exchange control restrictions on repatriation of capital, profits and dividends, enabling full financial transferability of capital, profits and dividends. Bahrain currently levies no taxes on personal or corporate income. There is no capital gains tax or withholding tax.
Importantly, Bahrain has been liberal in terms of foreign ownership requirements and permits 100% foreign ownership of companies in most sectors, including in residency, food, administrative services, arts, entertainment and leisure, health and social work, information and communications, manufacturing, mining and quarrying, water supplying and professional, scientific, technical and real estate activities.
For all these reasons, Bahrain companies are now increasingly used as an alternative to ‘offshore’ companies. They also have the advantage that bank account opening procedures must be completed prior to registration of the company.
Under Bahraini law, banks must notify the Ministry of Industry and Commerce (MOIC) that the required paid-up capital has been deposited in a company’s bank account before the Ministry will issue the certificate of incorporation of the company. This avoids the difficulty, sometimes experienced by offshore companies, of being unable to open an account following incorporation.
Activities for which 100% foreign ownership is permitted include:
Holding Company – Companies incorporated for the purpose of owning shares in other companies either in Bahrain or abroad. They do not engage in commercial activities or provide goods or services. The types of assets owned by a holding company can be shares in other corporations, as well as private equity funds, hedge funds, bonds, real estate, patents, trademarks and other valuable assets.
Commodity Contracts Brokerage – Companies incorporated for the purpose of buying and selling commodities offshore without the goods/commodity entering Bahrain.
· Management and Consultancy – Companies incorporated for the purpose of providing advice, guidance and operational assistance to businesses and other organisations on: management issues; financial decision areas; marketing objectives and policies; human resource policies, practices and planning; production scheduling and control planning.
Head Office or Management Office – Companies incorporated for the purpose of the overseeing and managing other units of the company or enterprise; undertaking the strategic or organisational planning and decision-making role of the company or enterprise; exercising operational control and managing the day-to-day operations of related units, which can be either inside or outside Bahrain.
Proprietary Trading – Companies incorporated for the purpose of trading stocks, bonds, currencies, commodities, or other financial instruments on their own account
Bahrain offers a range of vehicles through which to do business – the choice will be governed by the nature and size of the business, as well as the requirements of the investors.
Foreign companies with existing overseas entities also frequently set up branches and representative offices. All types of Bahraini company give the shareholders or the directors an Investor’s Residence Visa.
Minimum capital requirements for incorporating a company have also been reduced in most sectors making it more cost effective and attractive to incorporate in Bahrain. In particular, the minimum capital requirement for holding activities was reduced from BHD250,000 (USD658,000) to BHD50 (USD130) and the minimum capital requirement for a new business was reduced from BHD20,000 (USD50,000) to BHD50 (USD130).
Bahrain boasts operating costs up to 40% lower than its neighbours, one of the region’s most highly skilled local workforces and some of the most advanced soft infrastructure in MENA. Sitting at the nexus of the Middle East, Bahrain offers a convenient springboard into the wider region opportunity, including its largest market, Saudi Arabia.