Success tips when doing business in Bahrain
- The week commences on Saturday and extends through Thursday, Friday being the day of rest. Government offices are closed on Thursdays and Fridays;
- Your joint venture partner or Bahrain shareholder must not merely be a nominee for the sake of meeting the rules of foreign company incorporation. You should choose a partner that actually brings a lot to the table, including local knowledge your business would need in Bahrain Arabia;
- To optimize the success of your new business venture in the Bahrain, Healy Consultants recommends your firm i) complete a feasibility study ii) prepare a detailed business plan iii) communicate with the Bahrain Chamber of Commerce iv) speak to your local Bahrain embassy and v) communicate with Healy Consultants Clients who successfully launched their business in Bahrain;
- Foreign companies should be aware of i) Bahrain statistics and market data are usually imprecise ii) transactions tend to take longer than expected iii) more frequent and longer market visits are required, at least initially and iv) complex business procedures are common;
- During business meetings, Arabs spend a lot of time discussing things in general and then once they are comfortable will talk business with you. Expecting them to directly come to the point and discuss business is seen as rude and must be avoided;
- If invited to the home of an Arab, you should always accept and take every opportunity to become acquainted with local people. Your Arab host will be generous and interested in you. However, you should avoid debating politics and religion as your opinions might be regarded as ill-informed or even offensive, even if they seem acceptable to you from a western perspective;
- Learn enough Arabic to communicate the pleasantries, greetings and responses. You will enjoy peoples’ reactions. However it is important to use the Arabic language respectfully because Arabs believe it is designed to carry the word of God;
- Arabs are hospitable and place a great deal of emphasis on an outward expression of politeness and quiet demeanor. Arabs rarely say a direct ‘no’ to a proposition, so you must listen and observe carefully. If the response is ‘Leave it with me’ or ‘I’ll think about it’, there’s a good chance that the project will go nowhere;
- Avoid putting an Arab in a position where he might suffer a ‘loss of face’ in front of other Arabs. He will especially appreciate this, if he notices your action;
- While Bahrain is considered a cosmopolitan country, it is still an Islamic state and follows the Islamic culture. It is important for foreign companies to respect this and make themselves aware of the Islamic traditions in business;
- Foreign entrepreneurs need to be aware of how they must treat women in the workplace. Examples include:
- Not all Bahrain women are comfortable shaking hands with foreign men. You need to wait for the woman to put her hand out first before putting forth your own hand;
- Also it is not acceptable to touch a woman even in a friendly manner on the shoulder or other places at any time in the office;
- It is common for men and women to sit at different areas of the office. What this means is that you need to designate part of your office where all the men would sit and another part of your office where the women would sit.
- An essential factor in starting a business in Bahrain is to thoroughly research the business sector you are planning to invest in. Healy Consultants recommends our Client prepare a detailed business plan including an extensive market study and evaluation of competitors;
- Bahraini men are usually addressed by their first given name. For example, Mr Khalifa Bin Salman Al Khalifa has the given name of Khalifa, is the son of Salman and his tribe is Al-JKhalifa. He would simply be called Mr Khalifa.
Interesting facts about Bahrain
Bahrain was named amongst the top 10 improvers in World Bank’s 2017 Doing Business report. Bahrain’s rise in ranking was largely due to 3 reforms:
- Reducing minimum capital requirement;
- Improved access to credit by guaranteeing transparency and borrower’s rights;
- Made export easier by improving infrastructure and streamlining procedures at King Fahad Causeway.
Other interesting facts
- Bahrain was the first Arab country to discover commercial oil in 1932. Since then, it has been the first Arab country to move its economy away from oil dependency. However, 60% of government revenues and 30% of GDP comes from refining crude oil;
- Bahrain has been on the cutting edge of technology. It was the first Middle East country to install a computer, the first to have nationwide wireless, and ranked first globally in e-governance in 2010;
- Before the Arab Spring, Bahrain boasts one of the safest counties in the region. The homicide rate is a remarkably low 0.8 per 100,000 people;
- Bahrain became a member of the United Nations and the Arab league in 1971. It is a member of the International Monetary Fund, Gulf Cooperation Council, World Trade Organization and other international and Arab organizations;
- Once an archipelago of 33 islands, land reclamation increased it 84 islands. The largest island is the main Bahrain Island where the majority of inhabitants live;
- Bahrayn means the dual form of “sea” in Arabic. So al-Bahrayn means “the two seas”;
- Bahrain has historically been a close ally of the United States and is considered a “major non-NATO ally” (MNNA). While this does not automatically include a mutual defense pact, the United States is likely to provide security given economic interests in the country and its stationing of the US 5th Naval fleet.
Frequently asked questions
Can a Bahrain company be used to do business internationally?There are no restrictions on where a Bahrain company can operate. Bahrain provides market access to the Middle East and the Gulf Cooperation Council (GCC) states. There bilateral trade and economic agreements with 43 countries (including Singapore, China, India, France, and the UK) and signed a Free Trade Agreement (FTA) with the United States in 2004.
Is a Bahrain company a secure long-term solution?Bahrain is a reputable trading jurisdiction. Bahrain is competing against Malaysia to be the largest global Islamic banking centre. It is known for being the freest economy in the Arab free trade zone. and is a member of major organisations such as the World Trade Organisation (WTO).
Are there any restrictions on ownership of a Bahrain company?100% foreign ownership is allowed for companies engaged in technology, tourism, manufacturing-related services, consultancy services, industrial projects, and highly specialised sectors such as scientific laboratories. Some restrictions include real estate services, press and publication, film and cinematic services, the transportation sector, and business in commercial agencies. However, joint share companies, limited liability companies, and partnerships still require 51% shareholding by a Bahraini national in sectors such as trade, retail, and tourism. Foreign companies are also allowed to own real estate and land in Bahrain.
Are there any financial restrictions on a Bahrain company?There are no financial restrictions for companies in Bahrain. Free movement of capital, profits, or dividends is a financial advantage in Bahrain.
What are the tax implications of Bahrain company formation?Most companies in Bahrain are not subject to corporate tax, except those operating in the oil industry. In addition, there are no personal, value-added, or withholding taxes. Bahrain also offers 100% customs duty exemption on capital goods and goods for re-export, raw materials for manufacturing, semi-finished commodities imported for further processing, imports required for development projects, and initial import of capital goods by a manufacturing company.
Does Bahrain have a good network of double tax treaties?Bahrain has in excess of 39 double taxation agreements in place, including with the UK.