Accounting and legal

Accounting and tax

    Bahrain taxation information

  1. The Bahrain is exempt of all taxes including i) personal income tax ii) capital gain tax iii) VAT iv) withholding tax and v) corporate tax. That said, employer contributions for social security is 12% for Bahrain nationals and 3% for expats;
  2. There is a 10% municipality tax on commercial and residential property occupied by expatriates;
  3. Bahrain companies are required to file an estimated income tax declaration by the 15th day of the third month of the tax year. These accounts must be audited according to the laws set out by Law 26 of the 1996 Bahrain Commercial Companies Law;
  4. All goods imported into the Bahrain require customs clearance through the Directorate General of Customs which may only be obtained upon payment of the applicable customs duty. If an importer fails to settle the duty, the customs authorities are empowered to sell the goods to recover the due amount;
  5. Bahrain has Double Taxation Avoidance Agreements (DTA) with 39 countries including: Australia, Belgium, China, Canada, Czech Rep., Egypt, France, Germany, India, Iran, Ireland, Spain, Malaysia, Malta, Mexico, New Zealand, Pakistan, Singapore, Russia, Thailand, Turkey, and a free trade agreement with the USA;
  6. Only oil, gas and petrochemical companies are required to pay taxes of 46% of profits;
  7. Healy Consultants assists our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budgets and sensitivity analysis;
  8. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

  1. The Commercial Companies Law was established in 2001 and covers establishment, structure and governance of private business in Bahrain;
  2. The Legal Framework of Bahrain is a dual acting system which comprises of mainly Islamic Shari’a and aspects of conventional civil law. The Shari’a courts often hold precedence, especially in matters involving Muslims;
  3. Bahrain company directors are appointed, replaced and dismissed by the shareholders. Only the directors have the power to manage the day to day operations of the company. The identities of shareholders and directors are on the public registrar of companies;
  4. The Memorandum of Association (MOA) is a contract between the shareholders and comprises i) company activities ii) registered office address iii) shareholder and director details iv) share capital and v) profit distribution method;
  5. Each Bahrain business entities must appoint a manager. The manager is appointed by the memorandum of association (MOA) or by a separate management contract. Unless otherwise stated in the MOA, the company manager shall enjoy full powers of administration, and his acts shall be binding to the company, provided that it is supported with stating the capacity he enjoys;
  6. Every company must lodge an annual tax estimate confirming relevant details of the company for the public register including names and addresses of all directors, address of principal place of business, details of shareholders and their shareholdings and an estimate of annual taxable profits;
  7. All business activities conducted in Bahrain receive government approvals and permits and licenses. There is an obligation to register particular products with the government, including food, medical equipment, cosmetics, medicine;
  8. Bahrain is a full member of i) the World Intellectual Property Organization (WIPO) ii) World Trade Organization (WTO) (1995) iii) the Paris Convention iv) the Patent Cooperation Treaty (PCT) v) the WIPO Copyright Treaty vi) the WIPO Performances and Phonograms Treaty (WPPT) and vii) the Rome Convention;
  9. Foreign countries may only conduct business in Bahrain after it is licensed to so by the Ministry of Industry & Commerce (MOIC). The MOIC is the statutory body that regulates and controls the licensing procedures for all Bahrain business entities. Every Bahrain business entities must apply for one of the following licenses:
    • A trade license for buying and selling of goods including wholesale or retail trade enterprises, contractors, hotels, transport and storing establishments etc;
    • An industrial license to discover natural resources or transform raw materials into manufactured products;
    • A commercial or professional license to practice any profession such as engineering consultancy, auditing and accounting, business set up, medical and educational services.

  10. The Ministry of Industry & Commerce (MOIC) does not permit two different classified business activities under one license e.g. trading and manufacturing;
  11. The process of deregistering a company is dictated by the government. This process will take a minimum of six months. Healy Consultants fee to project manage company de-registration is US$1,450. During this six months period it is mandatory to maintain a resident company secretary and a legal registered office.

Contact us

For additional information on our accounting and legal services in Bahrain, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi