Healy Consultants Group assists multi-national clients with Middle Eastern business setup including i) Bahrain company formation ii) multi-currency corporate bank account opening iii) regulatory license approvals iv) business accounting and tax v) human resource solutions.

See full table

Advantages and disadvantages of Bahraini company formation

1. In contrast to other Middle Eastern countries, our clients prefer Bahraini subsidiary setup for regional manufacturing and distribution because:
   • Annual Bahraini operating costs are about 30% lower than GCC neighbours, including rental of commercial, industrial or residential space, skilled labour, utilities, etc. Even lower annual costs can be found in Bahrain’s Free Trade Zones, that offer minimal customs duties and 100% foreign ownership in many industries. These cost savings provide our clients with a competitive advantage, compared to other Middle Eastern countries.
   • According to The World Bank, average border compliance cost of export per unit from Bahrain is USD47, compared to an average MENA cost of USD442.
   • More than any other Middle East country, Bahrain allows 100 percent foreign ownership of local entities for the majority of business sectors including i) tourism services and ii) sporting events production and iii) mining and quarrying and iv) real estate and v) water distribution and vi) water transport operations and vii) crop cultivation and propagation and vii) oil and gas extraction projects.
   • Bahrain is a natural gateway to the Gulf Cooperation Council’s (GCC) USD1.5 trillion market, with particularly favourable access to Saudi Arabia, the region’s single largest market. Linked by the King Fahd Causeway, Riyadh is only a four-hour drive from Bahrain. ARAMCO in Dhahran is only a 30 minute drive from Bahrain.
   • Bahrain International Investment Park (BIIP) is a 2.5 million square-meter tax-free zone located minutes from Bahrain’s main Khalifa bin Salman port. The BIIP is most suited to manufacturing and services companies interested in duty free exporting from Bahrain. BIIP has space available for potential investors, including some plots of vacant land designated for new construction, and some warehouse facilities for rental. BIIP offers several incentives for international companies, including competitive land-lease rental rates; competitive utility costs, 100 percent foreign ownership, duty-free access to the GCC, five percent customs duty exemption on raw materials, plant machinery, and spare parts imported for manufacturing, and grants for training and employment of Bahrainis.
   • The Bahraini Dinar is a strong and stable currency. Since 2001, it is pegged (at a rate of USD 2.66) against the US dollar, thus minimizing forex risk for our clients. There is no black market or parallel exchange rate. There are no restrictions on converting or transferring funds. Standard & Poor’s lists Bahrain as B+ with a stable outlook.
   • Although Arabic is the official language in Bahrain, English is widely spoken, used and accepted by the local authorities for most governmental procedures. English is a compulsory second language in local schools.
   • Bahrain scores relatively high for IP protection, copyright protection and patent protection. With a global ranking of 42 out of 125 nations in the International Property Rights Index 2023, and a regional ranking of 5 out of 15 countries.
   • Non-Bahraini lawyers can represent our client in Bahraini courts. This in unique to the Middle East and a significant advantage to our client during legal contract disputes.
   • Khalifa bin Salman Port, Bahrain’s primary commercial seaport, provides a free transit zone to facilitate the duty-free import of equipment and machinery.
   • Compared to other Middle East countries, it is easy to secure an employment visa for expatriates. Consequently, the country has a diverse and multicultural population, with approximately 52.2% expatriates.
2. Some of our multi-national clients choose Bahrain as their regional headquarters because:
   • For global companies with a turnover of less than €750m, Bahraini companies enjoy zero corporation tax and zero withholding tax and zero payroll taxes. Consequently, there are no restrictions on the repatriation of capital, profits or dividends. There are no taxes levied on capital inflows or outflows.
   • While the Bahraini parent company is free of local taxation, it enjoys access to 45 international double tax treaties. Making it more tax efficient to extract dividends, management fees and royalties from Middle Eastern and African subsidiaries.
   • There are no restrictions on foreigners opening bank accounts and being the sole bank signatory. Bahrain is home to many prominent financial institutions, among them Citibank, American Express, and JP Morgan Chase.
3. Specific Bahraini investment opportunities for our clients include:
   • The launch of several large-scale infrastructure projects amounting to USD30 billion including i) the Bahrain International Airport Modernisation Program and ii) the Saudi Causeway upgrade and iii) the Bapco Modernization Programme and iv) the Bahrain Metro project.
   • Bahrain’s FinTech Bay is the largest financial technology centre in the Middle East, hosting companies involved in digital banking, e-wallets, blockchain, smart contracts, artificial intelligence, risk management, and other FinTech specializations. With a regulatory sandbox allowing fintech firms to test new products and services, approximately 34 companies have received approvals including the licensing of the first cryptocurrency trading platform in the Middle East. Companies wanting to operate in virtual assets in Bahrain must obtain a specific license for this activity which follows anti-money laundering regulations.
   • The Government is increasingly looking to collaborate with private sector companies through Public-Private Partnerships (PPPs), which are emerging as a key financing mechanism for large-scale infrastructure projects in the construction, transportation, and climate sectors.
4. Bahrain and the USA have a special business relationship. Our USA clients are attracted to Bahraini company formation because:
   • The 2006 Free Trade Agreement signed between Bahrain and the United States 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, except ownership of television, radio or other media, fisheries, real estate brokerages, and land transportation.
   • 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.
   • The U.S.-Bahrain BIT provides benefits and protection to U.S. investors in Bahrain, such as most-favored nation and national treatment, the right to make financial transfers freely and immediately, the application of international legal standards for expropriation and compensation cases, and access to international arbitration.

• With a population just under two million people, Bahrain offers a small domestic market to companies looking to do business there. Other challenges faced by our clients include:
  • Companies in Bahrain are obliged to comply with “Bahrainization” employment targets. Depending on the industry sector, a certain percentage of each company’s employees must be Bahraini nationals. The Government apply fines to companies that do not comply with “Bahrainization” requirements.
  • During the Bahraini company formation process, 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 setup process. As there is a lack of Bahrain embassies around the world, our clients may find it difficult to attest documents in a nearby Bahrain embassy.
  • Corruption is still a major challenge for our clients. Government kickbacks are frequently a normal part of doing business and is something that should be anticipated for large contracts.
  • For disputes over business and investments, local laws still favor Bahraini nationals over foreigners. Disputes with Bahraini shareholders and agents can cause serious problems for our clients. Furthermore, Bahraini courts can impose a precautionary restraint on company assets, pending the adjudication of a commercial dispute.
  • Despite the Government’s transparent rules-based tender procurement system, our clients sometimes report operating at a disadvantage compared with local firms. Public tenders for large-scale infrastructure projects are routinely opened and closed within a matter of weeks.
• Hydrocarbons still account for around 75% of government receipts, making the Bahraini economy vulnerable to fluctuations in oil prices.