Company Registration in Bahrain

Pauline Familara
Pauline Familara
15 December 2023
Company Registration in Bahrain

Company registration in Bahrain is an attractive option for optimizing business expenses by reducing tax payments. This state provides favorable conditions for doing business with a preferential tax regime for foreign investors — an excellent alternative to the United Arab Emirates. We analyzed the advantages, opportunities, and prospects for business by citizens of other countries in the Kingdom of Bahrain. We present a brief overview and tell you how to open a company in this country.

General Information about Bahrain

The Kingdom of Bahrain is a state in the Persian Gulf, located between the Arabian and Qatari peninsulas on a small archipelago consisting of the island of Bahrain and 84 smaller islands, 33 of which are artificial. Most of the country’s territory (83%) is on the island of Bahrain, connected to Saudi Arabia by a 16-mile bridge.

Bahrain covers an area of ​​766 square kilometers, and more than 1.5 million people live in it, but only 55% are citizens. The capital is the city of Manama. Arabic is the official language, although the country’s population also speaks English, Farsi, and Urdu.

The basis of Bahrain’s economy is the production, refining, and export of oil and petroleum products (30% of GDP). It also produces gas and exports aluminum and textiles. In recent years, the state has set a course to diversify the economy, including attracting foreign business to Bahrain and encouraging investors to invest in industries unrelated to oil and gas production.

Bahrain is a tax-free economic zone with a well-developed offshore banking business. Bahraini dinar is the national currency (1 BHD = 2.65 USD).

Advantages of Registering a Company in Bahrain

The advantages of opening and running a business in Bahrain include the following:

  • Legal tax reduction due to the absence of most taxes throughout the country without division into free zones.
  • A more straightforward company registration process than in other Gulf countries.
  • Simplified opening of a bank account, with the possibility of remote identification of the owner, no requirements for a minimum balance of funds, and making a deposit.
  • 100% ownership of the company by foreign capital.
  • The opportunity to obtain a resident visa is granted for 3 years automatically after opening a company. Family members of the investor can also apply for a resident visa.
  • Convenient location of the country at the intersection of trade routes and well-developed infrastructure. Bahrain has a seaport and an international airport with good road connections with Saudi Arabia.
  • Lack of currency control and the possibility of easy withdrawal of funds from the accounts of regional companies.
  • Low real estate prices and inexpensive labor.

All this provides promising prospects for successful business activities and company development.

Legal Requirements for Starting a Business in Bahrain

A foreign investor can open a company in Bahrain in one of the following organizational forms permitted by law:

  • WLL (With Limited Liability).
  • BSC (Bahrain Shareholding Company).
  • SPC (Single Person Company).

The main legal requirements that must be met when registering a company include the following:

  • A minimum authorized capital of 20 thousand BHD is required. It must be divided into equal shares (at least 50 BHD each). The company can be registered after all shares have been paid and distributed among the partners (founders, shareholders).
  • The number of shareholders in a company can be from 2 to 50, and it must be managed by a manager with signature rights (several managers) who is not a partner. There are no requirements for the presence of a board of directors.
  • The physical office in Bahrain, while the company must operate outside the jurisdiction of the kingdom, except for licensed types of business.
  • A WLL company cannot conduct state activities related to insurance, banking business, or investing funds of third parties.
  • The company’s shares cannot be in free circulation.

What Documents Are Needed to Register a Company in Bahrain?

To open a company in Bahrain, you will need to collect and submit to the registration authority the following documents:

  • Copies of personal documents (passports or national identity cards) of all shareholders, partners, and managers.
  • Constituent documents and decision of the board of directors to open a legal entity in Bahrain — for a corporate partner.
  • Results of the latest audit for legal entities — the company’s founders.
  • Business plan, memorandum of association, and articles of association of the new company.
  • Lease agreement to confirm the legal address of the company’s office.

Procedure for Registering a Company in Bahrain

To register a legal entity in the Kingdom of Bahrain, you must follow these steps:

  1. Decide on the type of activity, choose and register the company name.
  2. Form the structure of the new legal entity and its authorized capital. Develop the Charter and Memorandum of Association.
  3. Open a corporate current account in one of the country’s banks and deposit authorized capital.
  4. Submit documents for registration.

After receiving registration documents, each founder and director of the company has the right to obtain an investor resident visa and sponsorship visas for family members. But this is not a mandatory requirement.

Terms of Company Registration in Bahrain

It takes 10-20 days to register a legal entity in Bahrain. But, if the activities of the future company require additional approvals and obtaining licenses, the registration procedure may take a little longer (no more than 30 days).

If you want to open a business in Bahrain quickly, contact Dynasty Business Adviser specialists for help!

Taxation in Bahrain

The following activities are not subject to tax in the Kingdom of Bahrain:

  • Profits of legal entities that do not operate in the oil and gas sector (corporate income tax is provided here — 46%).
  • Capital gains.
  • Added value of goods and services sold outside the country. When selling them within the state, VAT is 10%.
  • Income of individuals.
  • Dividends, royalties, and interest on deposits.
  • Property.

In addition, there is a 10% municipal tax on rental properties.

How Much Does It Cost to Open a Company in Bahrain?

The cost of opening a company in Bahrain depends on its type, intended activity (whether it is necessary to purchase a license and its price), and the size of the office. In addition, you will need to contribute an authorized capital of $53 thousand.

Our article is for informational purposes only and is not advisory. To consult on the cost or procedure for registering a company in Bahrain, contact Dynasty Business Adviser specialists!

  • "Ease of Doing Business in Bahrain". Retrieved 2017-11-24.

  • "Population, total - Bahrain". World Bank. Retrieved 21 February 2020.

  • "World Economic Outlook Database, April 2019". International Monetary Fund. Retrieved 29 September 2019.

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