Сompany registration in Bahrain: Legal aspects and advice

Company registration is the process of formalizing the status of a legal entity in accordance with the laws of a certain country. During this process, the company is officially recognized as a legal entity with its own legal capacity.

To receive this status, it is necessary to provide certain documentation and fulfill the requirements established by the state authorities. Due to registration, the entity is able to conduct commercial activities, conclude contracts, participate in court proceedings and perform other legally significant actions.

If you plan to start a business in Asia, Bahrain is an excellent choice for registering your company. The Manimama team has conducted in-depth research, analyzed the main subtleties of incorporating in Bahrain, and is ready to share its results and help you choose the right jurisdiction.

What are the main advantages of incorporating a company (business) in Bahrain?

1. Promising Location and Access to GCC Markets

Thanks to its central location in the Persian Gulf, Bahrain provides businesses with easy access to the Gulf Cooperation Council (GCC) market, which boasts a population of over 57 million. A key advantage is its proximity to Saudi Arabia, the region’s largest economy, which is connected to Bahrain via a 25-kilometer causeway. This strategic position enables companies to conduct trade, logistics, and transportation across the region efficiently.

1. Favorable Tax Regime

Bahrain attracts entrepreneurs with its liberal tax policies. The country imposes no personal income tax, capital gains tax, or wealth tax, significantly reducing financial burdens on businesses. Corporate tax is only applied in specific sectors, such as the oil industry, while for most companies, tax rates remain minimal. This makes Bahrain one of the most competitive tax environments in the region.

1. 100% Foreign Ownership and a Business-Friendly Environment

Bahrain is one of the few countries in the region that allow foreign investors to own their businesses fully in most sectors. This eliminates the need for a local partner, a requirement in many neighboring countries, and simplifies business operations. Additionally, the Bahrain Economic Development Board (EDB) actively supports international companies, facilitating market entry and business expansion.

1. Advanced Infrastructure and Business-Oriented Free Zones

Bahrain offers entrepreneurs access to modern infrastructure, including Bahrain International Airport, the deep-water Khalifa Bin Salman Port, and well-developed industrial zones. The Bahrain International Investment Park (BIIP) and other free economic zones provide attractive business incentives, such as exemptions from import duties and tax benefits.

1. Highly Skilled Workers

Unlike many countries, Bahrain boasts a well-educated and competitive workforce, allowing businesses to recruit local professionals without excessive reliance on foreign labor. Additionally, the government invests in workforce development through initiatives like Tamkeen, which funds training and professional growth programs.

How to register a company in Bahrain and what are the main requirements for such registration?

Step 1. Initial setup

• Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the time frame, budget, and resources required to complete the process.
• Preparation and filing of the package of documents.

Step 2. Company registration

• Obtaining an electronic key by registering at the offices of the e-Government Authority in Bahrain before embarking on a request for registration;
• Electronically applying for all business through the e-gateway of the register system by providing the required documents and fees;
• Determining the legal form of the company, noting that some commercial activities require a particular legal form;
• Determining the commercial name of the company;
• Opening a corporate bank account and depositing the capital;
• Submitting the application for commercial registration electronically to the Commercial Register;
• Obtaining security clearance for foreign investors;
• Obtaining all necessary approvals and licenses to practice your desired business activity.

Requirements for registering a company in Bahrain on the example of a Limited Liability Company (LLC):

• Shareholders: the company is required to have at least 1 shareholder (partner).
• Director: the company is managed by a manager or managers from among the partners or others who are appointed for the first time through the founders and are appointed after that by a decision of its general assembly.
• Company secretary: there is no requirement.
• Minimum share capital: there is no minimum capital requirement. The company shall not be incorporated unless all cash and in-kind shares are distributed between the partners as well as being fully paid and the in-kind shares are delivered to the company. The company also must maintain reserve share capital.
• Legal address: the company needs a registered office address in Bahrain (this can be a physical office space / a work desk in a shared workspace / a virtual office address).
• Liability: partners are liable by the amount of their share in the share capital of the company.
• Auditor: the company is required to appoint 1 auditor or more who shall be selected by the general meeting of partners.
• Accounting: the manager of the company must:prepare, for each financial year and within at least 3 months from the end thereof, the company’s balance sheet, profit and loss account and a report on the company’s activities and financial position together with their recommendations as regards profit distributionforward to the MoIC a copy of each of the balance sheet, the profit and loss account, the annual report and the auditor’s report (no audit for 1st year) within 10 days from the date of preparing such documents

What do you have to know about taxes when registering a company in Bahrain?

Corporate income tax (CIT):

• In general, there is no CIT in Bahrain.
• Сorporate tax is only exist for companies whose activities are related to the gas and oil sector – 46%

Personal income tax (PIT):

• There is no PIT regime in Bahrain.

Value-added tax (VAT):

• The standard rate is 10%.
• The reduced rate 0% applies to some goods and services and others will be exempt from VAT.
• All entities or individuals conducting an economic activity independently to generate income and make annual supplies exceeding the mandatory threshold of BHD 37,500 (~ € 91,184) are required to register for VAT purposes and are required to be registered with the National Bureau for Revenue to obtain a VAT registration certificate and a dedicated VAT account number.
• Being a VAT registered business, the company is obliged to file a VAT return.

For readers?

Manimama provides assistance in choosing the right jurisdiction for company incorporation and in registering a business specifically in Bahrain. We have a good understanding of the tax and legal peculiarities of specific jurisdictions, which helps our clients make an informed choice based on their unique needs and development strategies. In our work, we take into account factors affecting the business environment, such as the level of competition, access to financial and human resources, as well as opportunities for further growth and development in different jurisdictions.?

By choosing our company formation service in Bahrain, you are working with a law firm that values integrity, competence, and client satisfaction. Let us help you set up a company in Bahrain and pave the way for your business success!

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.