Success tips when doing business in Bahrain in 2021
- For internal company matters, our Clients should be mindful of the following:
- Clients should be aware that i) Bahrain statistics and market data may be inaccurate ii) dealings may take longer than anticipated and iii) market studies take a longer time to complete;
- Bahrain is an Islamic country with restrictions and prohibitions on selected industries. Hence, before commencing the registration process, our Client must determine the applicable licenses/permits for their activity;
- The week commences on Saturday and extends through Thursday, Friday being the day of rest. Most international companies operate from Sunday to Thursday. Government offices are closed on Thursdays and Fridays;
- 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 be aware of the Sharia laws in business;
- We recommend your firm to i) conduct a feasibility study and market research ii) do up a comprehensive business plan iii) speak to your local Bahrain embassy or the Bahrain Chamber of Commerce and v) communicate with Healy Consultants Clients who successfully launched their business in Bahrain. This enhances the success rate of your new business.
- For external company matters, our Clients should be mindful of the following:
- Organisation structures are mostly hierarchical and male dominated in Bahrain, as reflected in the Bahraini society in general. Address higher authorities in a firm as “Sheikh” as a sign of respect;
- Your Bahraini partner or shareholder should not merely be a nominee for the sole purpose of being in compliant with foreign company incorporation regulations. Your partner should bring value to your company, including local business knowledge;
- For any initial business meetings, Bahraini tend to spend time on relationship building before discussing business. You may come across as being rude to talk about business directly and this should be avoided;
- As a predominantly Muslim state, expect Bahrainis to take time off to pray five times a day as per their religious obligation and always schedule a business meeting at least one week ahead. You can still find most offices still operating during the prayer times, except on Fridays where it is the Muslim Holy Day;
- All Muslims in Bahrain must fast during the holy month of Ramadan, and are allowed to work only 6 hours per day. Many local businesses operate on a shorter schedule and it is important to be mindful when arranging any business entertainment or activities during this period;
- Business cards are usually given out during the first business meeting and Bahrainis prefer to read business card details in Arabic. Hence, it is best to have one side of the card translated into Arabic before presenting it to your business contacts. When handing a business card to someone it should be presented with both hands with the Arabic side of the card facing the recipient. When receiving a business card, take time to read the card as it shows respect.
Interesting facts about Bahrain
- Bahrain was named amongst the top 10 improvers in World Bank’s 2017 Doing Business report due to their successful reforms;
- Bahrain was the first Arab country to discover commercial oil in 1932. Since then, it has been the first Arab country to try to move its economy away from oil dependency; however, 60% of government revenues and 30% of GDP comes from refining crude oil;
- 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 and the World Trade Organization;
- Bahrain has historically been a close ally of the United States and is considered a “major non-NATO ally” (MNNA);
- Bahrain was the first Middle East country to install a computer, the first to go wireless nationwide, and ranked first globally in e-governance in 2010;
- About 70% of the total population of Bahrain is Muslims, followed by Christians (10.2%) and Hindu (9.8%).
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 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.