Bahrain free zones

Bahrain free zones (FZ)

    how to register a company in Bahrain free zone area
  1. The entire country of Bahrain is in many ways one large free zone as i) it is tax exempt ii) allows for 100% foreign ownership in most industries and iii) has minimal customs duties;
  2. Specific free zones benefits include i) no annual rental ii) 50% reduction on utility costs iii) exemption on national labor hiring and iv) zero custom duties;
  3. Bahrain boasts three main Free Trade Zones (FTZ). These include Bahrain Logistics Zone (BLZ), Bahrain International Investment Park (BIIP), and Bahrain International Airport (BIA);
  4. Bahrain FZ are suitable for foreign companies intending to use Bahrain as a regional manufacturing or distribution base, with the bulk of their business conducted outside Bahrain. Free zones are mainly for import and export oriented companies who only require an office in Bahrain.

Advantages of free zone company formation

  1. FZ companies do not require a Bahrain national shareholder for trading and commercial activities. While it is mandatory to rent a free zone office at a low rent, it is not necessary to hire staff;
  2. Land rental rebates of 100% in government industrial areas for the first three years;
  3. Electricity rebates of 50% for the first five years of operation;
  4. No duties are imposed on goods imported and exported from the free zone.

Disadvantages of free zone company formation

  1. A free zone trading company must confine business activities to within that zone and cannot cater to customers in Bahrain and within the Bahrain unless using a local sponsor;
  2. Entering the free zones is a competitive process and requires approval from the free zone authorities. Companies must prove their companies will serve the Bahrain economy, free zone development, start a major project in one year, and hire locals in five years;
  3. The paid up share capital of a free zone business ranges from US$1 to US$133,000 depending on i) the free zone chosen and ii) the FZ company structure. After FZ company incorporation, the paid up share capital can be used to fund daily business activities;
  4. Companies must launch a project within one year or face losing licensing from MOIC;
  5. Company licenses are renewable annually after FZ laws are complied with including submitting annual audited financial statements to the FZ Authority;
  6. A free zone entity must rent an office within its free zone.

Free Zone logistics

  1. Bahrain FZ enjoy excellent infrastructure and business environment including warehouse facilities, onsite immigration department and onsite customs clearance department;
  2. Each free zone Interior Design Department finalizes with the foreign entrepreneur the optimum layout and interior design of your office. The office includes i) furnished and semi-enclosed workstations ii) high speed internet network iii) dedicated phone number iv) residence visas and work permits and v) parking facilities.

Commercial considerations

  1. Free zone activities allowed include i) import of raw materials ii) manufacturing iii) processing and assembling and packaging iv) exporting finished products and v) storage or warehousing of products;
  2. A service license allows the investor to carry out the services specified in the license within the free zone. Consulting services include management, finance, investment, legal issues, labour relations, industrial development, marketing;
  3. Other services include logistical support such as: restaurants or food outlets, catering services, travel agencies, leisure and social activities, insurance, cargo & freight forwarding, accounting, and audition services.

Bahrain Logistics Zone (BLZ)

  1. The BLZ is ideal for regarding-exporting and logistics companies benefiting from zero-tax and duty exemptions. It is also a boutique center for manufacturers in component assembly, packaging, testing and repair companies;
  2. The Bahrain Logistics Zone is ideally located near Khalifa bin Salman Port (KBSP), the largest port in Bahrain;
  3. BLZ is popular because of i) the proximity Khalifa bin Salman ii) an on-site customs inspection iii) operates 24 hours a day and iv) has modern facilities created in 2008;
  4. It spans approximately 100 hectares of prime real estate. Plot sizes range from 2,000 square meters and upwards. Average costs are US$10 a year per square meter.

Bahrain International Investment Park (BIIP)

  1. The Bahrain International Investment Park is ideal for large manufacturing operations, including food process, medical technology, electronics, and materials. Export led services including insurance claims, administration, software and information systems;
  2. BIIP is much larger than the other free zones at 247 hectares. As such, land is extremely cheap at just US$1.33 per square meter;
  3. BIIP is popular because it is i) cheaper than the other free zones ii) operates 24 hours a day iii) has easier access to facilities and iv) is well located between the Bahrain International Airport and the new Shaikh Khalifa Sea Port.

Bahrain International Airport (BIA)

  1. Technically, Bahrain International Airport is not a free zone, as there are some duties on exports. However 100% foreign ownership is allowed and it has a “bonded cargo terminal” allowing for delayed payment of duties until products leave the facility;
  2. BIA is a 19,000 square meter terminal specializing in cargo sales, transshipments, break-bulk cargo handling, and customs clearance.

Comparison of free zones

 Bahrain Logistics Zone (BLZ)Bahrain International Investment Park (BIIP)Bahrain International Airport (BIA)
Incorporation time6 weeks6 weeks6 weeks
License costUS$230US$230Various
Share capitalUS$53,000US$12,500US$53,000
Warehouse space 2000 sq metresUS$20,000US$12,500US$28,375
Customer serviceGoodFairVery good
Office space availabilityLimitedLimitedMany
Public registrar of companies?YesNoNo
Open 24 hours a day?YesYesYes
Company shareholders allowed?YesYesYes
Must rent a free zone office?YesYesYes
Incorporation period4 weeks4 weeks4 weeks
Shelf companies allowed?NoNoNo
Minimum directors allowed?111
Wholly foreign owned?YesYesYes
Corporate directors allowed?YesYesYes
Bahrain resident company secretary required?YesYesYes
Can apply for immigration visas?YesYesYes
Type of companyLimited liabilityLimited liabilityLimited liability
Annual audited financial statements?YesYesYes
Annual license renewal?YesYesYes
Healy Consultants feesUS$7,300US$7,300US$7,300

10 steps to setting up a free zone company in Bahrain

  1. Prior to Bahrain freezone company set up, our Client i) settles Healy Consultants fees, ii) signs and returns our Client engagement letter and iii) provide us all the required due diligence documents;
  2. Healy Consultants drafts a detailed Bahrain free zone business set up engagement project plan, mapping out by week each step to engagement completion, optimising transparency and setting Client expectations;
  3. The exact Bahrain corporate structure is agreed with our Client. Thereafter, Healy Consultants i) reserves company name with the free zone authorities through online business portals and ii) prepares company deeds of establishment and articles of association notarised by a Bahrain embassy;
  4. Our Client supplies Healy Consultants with a lease agreement for their office premises. If this is not possible, Healy Consultants will supply virtual office services for six months until our Client finds their preferred business address;
  5. Healy Consultants assists our Client open a corporate bank account with a Bahrain bank. Our Client deposits the necessary paid up share capital and supplies Healy Consultants with a certificate of deposit and bank statement;
  6. The relevant license application is submitted to the specific free zone authorities together with i) the MOA ii) name approval certificate iii) the lease agreement iv) a certificate of paid up share capital and v) business plan. Within three weeks, business license approval and company registration certificate are received;
  7. Healy Consultants applies for all the necessary work visas from the Labour Market Regulatory Authority (LMRA). LMRA then provides a login ID and password to register individuals for employment with the company;
  8. Following engagement completion, Healy Consultants couriers a full company kit to our Client, including original Bahrain corporate documents, unopened bank correspondence and a Client feedback survey.

Frequently asked questions

Contact us

For additional information on our free zone company registration 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