The Kingdom of Bahrain has world-class infrastructure, excellent connectivity, low operating costs and business-friendly laws. Bahrain attracts foreign direct investment by allowing businesses and companies to operate in the country while offering various incentives and tax-friendly policies.
The Free Trade Zones in the Kingdom of Bahrain offers a competitive edge for the foreign businesses operating in it with purpose-built infrastructure, specialised facilities, separate rules & regulations, exclusive connectivity to ports and other major industrial areas through multi-modal transport systems.
Advantages of Starting a Company in the Kingdom of Bahrain
Starting a business in Bahrain has numerous benefits and offers the company an upper hand in securing business, lower operating costs and a competitive edge in the market.
- 100 percent foreign ownership is allowed for most of the businesses
- No duties for companies serving the free zone including import & export
- Free zone companies can avail electricity rebates for the first five years of operation
- 100 percent land rebates in the government industrial areas for the first three years
- Local services are permitted for a Bahraini foreign-owned company outside of free zone
- Zero percent corporate tax
- Strategic location in the Middle East with Low operating costs
- Excellent connectivity to Saudi Arabia and other GCC countries
- Exemption from Import and export duties
- Access to Bahrain’s double taxation treaties
- A liberalised economy with a strong presence in the Middle East
- Streamlined business policies
- Foreign investment and ownership permitted
Read to know more about “How to register your company in the Kingdom of Bahrain?”
Limitations of an FTZ Company
- The Bahrain Free zone must confine their operations and business activity within that zone (i.e., the entity cannot engage with Bahraini customers and Bahrain unless otherwise having a local sponsor)
- The free zone company must show proof of funds according to the type of business activity
- The companies registering in the free zone must start/launch their business projects within one year from the date of incorporation
- The company licenses are renewable annually after the free zone laws are complied with including submitting annual audited financial statements to the authorities
- The company must rent office space within its free zone
- Companies must submit all the verified financial documents of the company to MOICT annually
Should I start a Free Zone company or Bahrain Company? Confused Contact us and discuss with our Bahraini experts, we shall guide you in which type of business setup is advantageous according to your business activity in the Kingdom of Bahrain.
Types of Business Entities that you can set up in Bahrain FTZ
While starting your business in Bahrain’s Free Trade Zones specific legal company structures are advantageous for operating the foreign company within the zone as the structure can avail several benefits and allows flexibility in running the company.
Some of the best available company structures for FTZ’s in Bahrain are:
- Bahrain Shareholding Company (B.S.C) Public
- Bahrain Shareholding Company (B.S.C) Closed
- With Limited Liability Company (W.L.L)
- Simple Person Company (S.P.C)
- Individual Establishment
- Branch of Foreign Company
List of Free Trade Zones in the Kingdom of Bahrain
The Free Trade Zones in Bahrain have the specialised infrastructure, world-class facilities, exclusive regulations and rules, excellent multi-modal connectivity through sea, land & air to major the Middle East & North African (MENA) markets, and offers a world-class environment for the businesses and companies to operate in the zone. The Free Trade Zones are predominately used for import, export, logistics and material processing.
1. Bahrain International Investment Park (BIIP)
The Bahrain International Investment Park (BIIP) is located in the Salman Industrial City, Muharraq Island. The BIIP is strategically positioned on the North coast of Bahrain taking only five minutes’ drive from the Bahrain Logistics Zone (BLZ) and ten minutes from the Khalifa bin Salman Port.
The BIIP is not a considered a free zone according to the law as the businesses & companies located in the area are considered to operate from Bahrain mainland which is within the GCC market empowering them with seamless cross-border access with a regional promotion of their products and services.
This is considered as an advantage as the foreign companies operating out this zone avails the benefits as such it is operating in a free zone and also the advantages of duty-free cross-border operations across the GCC since the company is located in Bahrain.
Type of Businesses in Bahrain International Investment Park
- Large scale manufacturing (i.e., B.S.C Public, Foreign Company Branch)
- Small and Medium Enterprises (SME) (i.e., With Limited Liability Company (W.L.L), B.S.C Closed )
Activities Allowed in Bahrain International Investment Park
- Food processing and packaging
- Aluminium smelting, rolling and export industries
- Iron and steel engineering
- Medical (i.e., Pharmaceuticals, medical devices)
- Construction material manufacturing
- Material and chemical processing (i.e., Plastics, Fiberglass, Petrochemicals)
- Information technology
- Consumer goods (i.e., Electronics, garments and textiles)
- International services (i.e., Consulting, marketing, logistics, knowledge-based services)
Here is a detailed information about setting up your company in the Bahrain International Investment Park.
2. Bahrain Logistics Zone (BLZ)
The Bahrain Logistics Zone is located at the heart of Salman Industrial City in Al Hidd Industrial Area Muharraq Island, the BLZ is a regional trans-shipment hub with highly-integrated logistics, purpose-built Infrastructure, large-scale berthing facilities and plot entry allowances, designed explicitly for handling container truck traffic and freight-forwarding operations while remaining as the dedicated customs-free zone and value-added logistics park in Bahrain.
Activities Allowed in Bahrain Logistics Zone
- Logistical support services (i.e., Import of raw materials and equipment, trans-shipment activities)
- Regional distribution (i.e., Exporting finished goods and products)
- Freight forwarding (i.e., sea to air & sea to land final point distribution)
- Processing, assembly and packaging
- Storage and warehousing of products
- Travel agencies
- Finance, Insurance and investment
- Consulting & management services
Know more about setting up your business in BLZ.
3. Bahrain International Airport (BIA)
The Bahrain International Airport serves as a driver of economic growth in the region by offering top-notch airport facilities and modern air logistics. It was established in 1927 as the first airport serving the Kingdom of Bahrain and currently operates as a significant aviation hub in the region.
The Bahrain airport currently serves as the Gulf Air's central hub of operations, in addition to this the airport continually upgrades the facilities and services with the latest technology to make the existing airport into a world-class facility, with best-in-class customer service which is in line with the Kingdom’s long-term Bahrain Economic Vision 2030 and maintaining its reputation as a leading financial, cultural and aviation centre in the Middle East.
Know more about the Bahrain International Airport.
Special Free Zones in the Kingdom of Bahrain
The Bahrain Free Zone company structure is suitable for foreign companies interested in operating manufacturing or distribution base with Bahrain as the regional hub or centre with significant operations carried out in Middle East regions outside the country.
1. Sheikh Khalifa bin Salman Port (KBSP)
The Sheikh Khalifa bin Salman Port (KBSP) in the Northern coast of Bahrain is the premier transhipment hub for Northern Gulf. Strategically located in the Northern Gulf region, KBSP is an ideal cost-effective choice for carriers' operating the trans-shipping containers to the critical and rapidly expanding Upper Gulf region, particularly the markets of Kuwait, Iraq, Saudi Arabia, Qatar and northern Iran.
The KBSF currently operates at 47 percent of its capacity and the container side is presently designed for around one million tonnes capacity use and ready for further expansion if the need arises.
Know more about facilities in the Sheikh Khalifa Bin Salman Port
Bahrain Investment Wharf (BIW)
The Bahrain Investment Wharf is a hybrid industrial investment park privately owned & managed industrial investment park resulted from Public-Private Partnership between Inovest and the Government of Bahrain represented by the Ministry of Industry, Commerce and Tourism (MOICT).
The zone comprises of business spaces, logistics zones, information technology centres, commercial spaces and residential development estate.
Facilities at Bahrain Investment Wharf
- Serviced Lands
- Pre-built Commercial Spaces
- Pre-built warehouses
- Takhzeen Self-storage facilities
- BIW Business Park
- BIW Labour accommodations
Know more about setting up your business in BIW.
Activities Prohibited in the Kingdom of Bahrain
- Alcoholic drinks manufacturing
- Narcotics manufacturing
- Weapons manufacturing
- Cigarettes manufacturing
- Manufacturing, import and dealing of Asbestos and its by-products
- Importing of all types of waste and treatment, storage and dumping of radioactive materials or toxic waste in any form in Bahrain
- Import and use of restricted chemicals
- Letter-post (Exclusive only to the Bahrain Post)
Taxation in the Kingdom of Bahrain
Taxation of Companies
The Kingdom of Bahrain does not operate a general tax system but only taxes the income of oil companies. The oil & natural gas companies are subject to tax on any profits generated from exploring, producing, processing, or refining oil and oil-related products in Bahrain regardless of the company's place of incorporation.
Payroll and Social Security Taxes
Employers pay ten percent of payroll, and the employees pay five percent for social insurance against old age, disability and death (only for Bahraini employees only). For workplace injuries, employers contribute nearly three percent of all employees payroll. This contribution is reduced to 1 percent if the employer provides benefits and medical cover at employer-owned hospitals. Besides, companies with more than 50 employees must either provide an approved training scheme or pay a training levy of one percent of the Bahraini employee pay and four percent for foreign employees.
Individual, Capital, Withholding and other Taxes
- According to the Bahrain laws, there is no individual tax for income and wealth. The religious wealth tax (Zakat) is not levied in the Kingdom.
- No form of capital tax is levied
- No withholding tax on interest, dividends, fees or royalty payments
- The municipal tax of 12 percent on the rental of commercial property has to be paid
Import & Export Regulations in the Kingdom of Bahrain
There are no taxes charged on exports from the Kingdom of Bahrain.
Licenses are not required for most of the imports, except armament, ammunition and alcohol. There is a negative list of products whose imports are prohibited. Customs duties of 5 percent apply to most dutiable imports. Imports from GCC member countries are exempt from taxes. The customs duties for alcohol is 125 percent, and tobacco is 100 percent.
Who We Are
We at Commitbiz have developed comprehensive capabilities in assisting businesspeople, entrepreneurs, and leaders to realise their idea of starting their business in Bahrain. Undertaken several successful projects in the past with various businesspeople across the world. Our Bahrain team has the domain knowledge on the local Bahraini rules, regulations, & customs so that you don't have to bother with it. If you want to know the business opportunities in the Kingdom of Bahrain, feel free to contact us - we'd be glad to assist.