Bahrain company registration

DOING BUSINESS IN BAHRAIN IN 2019

Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Bahrain business registration ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) virtual office solutions.

Summary table of Bahrain company registration

SummaryLLCSPCFast business setup solutionHolding companyFree zone LLCPublic joint stock companyRepresentative officeBranch office
Also known asWLLSPCFast WLL solutionHolding companyFZCBSCROBranch office
Best use of company?All products and servicesAll products and servicesClose a customer deal nowInvestment/asset holdingManufacturing and export tradingTo secure public fundingMarketing & researchSpecific projects
How soon can you invoice Clients/sign sales contracts?3 months3 months6 weeks3 months3 months3 months3 months3 months
How soon can you hire staff?3 months3 months6 weeks3 months3 months3 months3 months3 months
How soon can you sign a lease agreement?ImmediatelyImmediately1 weekImmediatelyImmediatelyImmediatelyImmediatelyImmediately
How long to supply corporate bank account numbers?2 months2 months5 weeks2 months2 months2 months2 months2 months
How long to supply company registration / tax numbers?3 months3 months6 weeks3 months3 months3 months3 months3 months
Corporate tax rate on annual net profits?0%0%0%0%0%0%0%0%
Limited liability entity?YesYesYesYesYesYesNoNo
Government grants available?YesYesYesYesYesYesNoYes
Government approval required for individual foreign owners and directors?YesYesYesYesYesYesNoNo
Resident director/partner/manager/ legal representative required?NoNoNoNoNoNoYesYes
Minimum paid up share capital?US$2,660US$2,660US$2,660US$2,660US$2,660US$663,000nonenone
Can bid for Government contracts?YesYesYesYesYesYesNoYes
Corporate bank account location?BBKNBBKFH BahrainNBBSCB BahrainBBKArab BankSCB Bahrain
Can secure trade finance?YesYesYesYesYesYesNoYes
VAT payable on sales to local customers? (2019 onwards)5%5%5%5%5%5%Cannot trade5%
Average total business set up engagement costs?US$25,131US$25,131US$38,153US$23,131US$25,131US$25,131US$26,131US$26,132
Average total engagement period?3 months3 months4 months3 months3 months3 months3 months3 months

See full table

Accounting and tax considerationsLLCSPCFast business setup solutionHolding companyFree zone LLCPublic joint stock companyRepresentative officeBranch office
Statutory corporate tax payable?0%0%0%0%0%0%0%0%
Legally tax exempt if properly structured?YesYesYesYesYesYesYesYes
Group HQ tax incentives?NoNoNoNoNoNoNoNo
Must file an annual tax return?NoNoNoNoNoNoNoNo
Must file annual financial statements?YesYesYesYesYesYesNoYes
Must appoint an auditor?NoNoNoNoNoNoNoNo
Access to double taxation treaties?YesYesYesYesYesYesNoYes
Withholding tax on payments to foreign shareholders?0%0%0%0%0%0%0%0%
Company RegistrationLLCSPCFast business setup solutionHolding companyFree zone LLCPublic joint stock companyRepresentative officeBranch office
Resident director/partner/manager/ legal representative required?NoNoNoNoNoNoYesYes
Minimum number of directors/managers?11111511
Minimum number of shareholders/partners?211117Parent companyParent company
Maximum shareholding for foreigners?100%100%100%100%100%100%100%100%
Maximum shareholding for foreigners for trading business?49%49%49%49%49%49%100%100%
Minimum statutory paid up share capital?US$2,660US$2,660US$2,660US$2,660US$2,660US$663,000nonenone
Security deposit to be kept with Government?NoNoNoNoNoNoNoNo
Shelf companies available?YesYesYesYesYesYesNoNo
Time to incorporate a new entity?3 months3 months6 weeks3 months3 months3 months3 months3 months
Can easily convert to a BSC?YesYesYesYesYesYesNoNo
Public register of shareholders and directors?YesYesYesYesYesYesYesYes
Can have preference shareholders?YesYesYesYesYesYesNoNo
Business ConsiderationsLLCSPCFast business setup solutionHolding companyFree zone LLCPublic joint stock companyRepresentative officeBranch office
Good entity for trademark registration?YesYesYesYesYesYesNoYes
Can secure an import and export license?YesYesYesYesYesYesNoYes
Sponsorship by a local citizen required?No
Our Client needs to travel to Bahrain for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?Yes
Can be wholly foreign owned?Yes
The entity will likely be regulated by?MOCI
Monthly VAT reporting to the Government?No
Must sign an office lease agreement during incorporation?Yes
Shareholders & directors documents to be attested/translated?Yes
Each foreign director needs a personal income tax number?No
Foreign director needs a residence visa?No
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?None
Can secure residence visa for business owner?Yes
Other useful information
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average custom duties suffered?5%
Average monthly office rental? (US$ per sq m)US$20
Minimum statutory monthly salary?US$265
Average monthly US$ salary for local skilled employees?US$3,500
US$ deposit interest rate? (1 year average)1.75%
Overseas remittance currency controls?No
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Good
Crowd funding available in this country?Yes

Bahrain business setup summary

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  • Advantages and Disadvantages

    Advantages of Bahrain company registration

    Bahrain business registration services

    1. The country has relaxed some of its registration requirements, including:
      • In 2016, the Bahraini government decreased the paid-up share capital requirement to US$2,660 (BD1,000);
      • Most business activities in Bahrain can be performed by 100% foreign owned companies;
      • The Free Trade Agreement signed between Bahrain and the United States in 2006 legally provides US entrepreneurs with the same business rights as Bahrainis. This allows US Entrepreneurs 100% access to all industries and business activities in Bahrain;
      • Bahrain is one of the few Arab countries open to Israeli entrepreneurs. Visas can be obtained and businesses established for those holding Israeli passports. While still a Muslim country, Bahrain has elected Jewish ambassadors and had as many as 1,500 Jewish residents. The 2002 Bahrain constitution guarantees religious freedom;
      • Bahrain is a member of both the Gulf Cooperation Council (GCC) and the Greater Arab Free Trade Area (GAFTA).
    2. There are many benefits for companies incorporated in Bahrain, including:
      • Companies are exempt from corporate i) income tax ii) withholding tax;
      • Additionally, companies incorporated in Bahrain’s free zones enjoy zero customs duties;
      • Within five months, a foreign bank can set up a licensed subsidiary in Bahrain with i) a paid-up share capital of US$2,690,000 and ii) a license fee starting at US$16,000;
    3. Entrepreneurs can also take advantage of Bahrain’s well developed financial sector:
      • Bahrain is the easiest country to secure corporate finance and to open corporate bank accounts in the Middle East and Africa (MEA) regions;
      • Bahrain is a central hub for Islamic banking. As these global financial services are growing 20% annually, Bahrain is likely to ride the tide;
      • Bahrain has one of the most liberal business environments in the MEA. Consequently, the 2019 Heritage Foundation’s Index of Economic Freedom votes Bahrain as the 4th freest economy in the Middle East and the 18th freest economy globally.
    4. The Bahraini economy is a diverse one that provides incentives and promotes growth in the following sectors:

      • Industrial sector:
        • Being located at the heart of the Gulf Cooperation Council (GCC), a market that is now worth more than US$1.6 trillion, Bahrain proves to be an ideal location for companies to establish their businesses and meet the GCC nations’ increasing demand for consumer goods and services;
        • Being a member of the GCC common market, companies incorporated in Bahrain would benefit from the extensive network of Free Trade agreements;
        • Additionally, Bahrain has signed bilateral trade agreements and economic treaties with more than 60 nations along with an agreement for the avoidance of double taxation with the UK;
        • Bahrain’s Ministry of Industry, Commerce & Tourism operates 10 industrial areas. Companies incorporated in these industrial areas can benefit from a tax exemption on the capital required and the raw materials used for manufacturing of end products.
      • Logistics services:
        • Bahrain is an ideal location for logistics companies since it has easy access to the emerging and rising Gulf nations;
        • Bahrain has excellent road, air, and sea connectivity to all the main business centres in the Gulf nations;
        • The Bahrain Logistics Zone (BLZ) is the nation’s first logistics area that provides the logistics companies with high-quality services along with the benefit of being close to the Khalifa Bin Salman Port.
      • Financial services:
        • Bahrain has gradually become the global leader in Islamic Finance. The nation has the largest concentration of Islamic Financial Institutions in the Middle East;
        • The Central Bank of Bahrain currently finances various activities, including research, education and training in Islamic finance (Waqf fund).

    Disadvantages of Bahrain company registration

    1. There are still some strict requirements for foreign investment, including:
      • Foreign ownership is forbidden in the industries of real estate, media, transportation of goods/people, automotive rental, oil product supply, Muslim services, foreign manpower sourcing, and accounting. If our Client is looking to perform such activities, Healy Consultants recommends the use of either a nominee Bahrain shareholder or registering the entity with 100% US shareholders;
      • A maximum foreign ownership restriction of 49% also applies to the industries of construction, trade and retail, travel and tourism, health care and pharmacies. For these industries, Healy Consultants recommends using a 51% nominee Bahrain shareholder or registering the entity with 100% US shareholders;
      • When registering a company outside of one of Bahrain’s Free Zones, the employment of foreign workers is limited by a quota.
    2. Incorporation process can be a very time consuming and expensive endeavor, because:
      • It takes 3 months to set up a company and open a corporate bank account in Bahrain. Unfortunately, The Bahraini Government and Authorities are slow to provide the necessary approvals;
      • During the registration of a business in Bahrain, the Government frequently requests documents to be attested by the Bahrain Embassy in the country of origin of our Client. This is both a costly and time-consuming exercise which prolongs the company incorporation process.
      • As there is a lack of Bahrain embassies around the world, our Clients may find it difficult to attest documents in a Bahrain embassy in the country of the client’s domicile. To this, Healy Consultants Group will advise the alternative solution;
      • The cost of setting up a business in Bahrain is high due to various fees including i) legal and multiple government fees, ii) compulsory annual office rentals and iii) paid up share capital requirements.
    3. The country’s high corruption is still a major challenge for companies’ activities, because:
      • Government kickbacks are frequently a normal part of doing business and is something that should be anticipated for large contracts (although this is not always required);
      • Business practices and laws in Bahrain still favor Bahraini nationals over foreigners whenever disputes over business and investments arise. Disputes with Bahraini shareholders and agents can cause serious problems for foreign investors. Furthermore, Bahraini courts can impose a precautionary restraint on foreign company assets, pending the adjudication of a commercial dispute.
    4. All companies incorporated within Bahrain are required to comply with the “Bahrainisation” policies if it hires more than 10 expatriates. Under these policies, the company is obliged to hire a minimum number of resident Bahrainis (this requirement can be calculated here), additionally, the expatriate employees might be subject to certain restrictions as set by LMRA in Bahrain;
    5. Unfortunately, as of the 1st of January 2019 Value-Added Tax has been implemented at 5% in Bahrain.
  • Best uses for a Bahrain company

    Regional headquarters

    Bahrain is an optimal choice for companies to establish their regional headquarters, because:

    • Bahrain is an excellent base for companies to tap into the Middle Eastern and North African markets (MENA), allowing them to extract dividends, management fees and royalties from other regional subsidiaries. Furthermore, setting up in Bahrain is generally easier as the real estate and labor is less expensive than in places like the United Arab Emirates;
    • A Bahrain company will allow our Clients to maximize their profits while legally minimizing their international tax liabilities as there are no corporate taxes, no personal taxes, no withholding taxes, no capital gains tax levied, almost no import & export taxes and a social security contribution of only 1% require from expatriates. Due to these factors and in addition to the 44 international double taxation agreements signed with numerous countries, Bahrain can be a great tax planning vehicle for international companies;
    • Bahrain has easier service access to the Saudi Arabian market, even more so than the UAE. Linked by the King Fahd Causeway, Saudi Arabia’s capital Riyadh, is only a four-hour drive from Bahrain and Dhahran is only a 30 minute drive from Bahrain which houses Saudi Arabia’s biggest oil company headquarters. The United Arab Emirates in comparison, has no major highways with KSA and travelers must either drive between 8-18 hours or fly to reach Saudi Arabia’s major cities;
    • Bahrain itself houses a cosmopolitan, multi-national population, a developed infrastructure for tourism, banking, entertainment and business, high quality office and residential accommodation, reliable power and utilities, first class hotels, hospitals, schools, and shops;
    • As a member of the Gulf Cooperation Council (GCC), companies in Bahrain can do business through branches and subsidiaries in GCC nations more easily than is possible with foreign companies.

Company registration

  • Time to incorporate:Twelve weeks
  • Cost to set up: US$28,374
  • Minimum capital: US$2,660
  • Physical office required: Yes

Required appointments

  • Shareholders: 2
  • Directors: 2
  • Company secretary: Yes
  • Resident director: No

Key facts

  • Corporate tax rate: 0%
  • Corporate tax base: Territorial
  • Shelf companies: Available
  • Main company type: SPC

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Contact us

For additional information on our company registration services in Bahrain, please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi