Geography and history have played a prominent role in shaping the Kingdom of Bahrain’s position as a major commercial centre. Its location in the heart of the Arabian Gulf gives it strategic access to both the European and Asian markets, providing entrepreneurs with the ideal springboard for meeting a wider customer base.
The Kingdom of Bahrain is an archipelago of islands, the largest being Bahrain Island, just off the western shores of the Arabian Gulf and connected to Saudi Arabia by the King Fahd Causeway. Capitalising on its history as a trading nation and to diversify its economy away from oil, Bahrain has sought to position itself as a regional services hub.
Bahrain gained full independence from the UK in 1971. The House of Khalifa is the royal family of Bahrain. The current head of the family is Hamad bin Isa Al Khalifa, who became the Emir of Bahrain in 1999 and proclaimed himself King of Bahrain in 2002. Bahrain has a bicameral National Assembly (al-Jam’iyyah al-Watani) consisting of the Shura Council (Majlis Al-Shura) and the Council of Representatives (Majlis Al-Nuwab). Bahrain is a member of the Gulf Cooperation Council of Arab States (GCC), Arab League and the United Nations.
The government has developed the transportation, communications and financial infrastructure necessary to attract and serve international business. Bahrain has a relatively liberal business environment and the government is keen to attract foreign investment. The primary aim of the government is to continue with industrial diversification with an emphasis on knowledge-based industries where service industries are considered to be the prime target.
The government is particularly eager to further develop tourism, healthcare, private education and financial services. In addition, Bahrain is recognised as a major banking and financial centre in the region, with a particular emphasis on investment and Islamic banking activities. Bahrain is also home to many large structures, including the Bahrain World Trade Center and the Bahrain Financial Harbour.
Bahrain imposes no exchange control restrictions on repatriation of capital, profits and dividends, enabling full financial transferability of capital, profits and dividends. Bahrain currently levies no taxes on personal or corporate income. There is no capital gains tax, no withholding tax and no value-added tax (VAT). The Bahraini Dinar (BHD), which is fully convertible, is pegged to the US dollar at BHD1 = USD2.65.
Forming a company in Bahrain offers excellent access to the GCC states, especially Saudi Arabia, which is the largest market in the region. Bahrain has an expanding treaty network that includes over 30 double tax agreements with key partners in Asia, Europe and the Americas, as well as the Middle East and Africa. This is supplemented by bilateral investment treaties with countries including India, Italy and the US, and Free Trade Agreements with trading partners such as the US and Singapore.
Bahrain offers a range of vehicles through which to do business – the choice will be governed by the nature and size of the business, as well as the requirements of the investors. All types of Bahraini company give the shareholders or the directors an Investor’s Residence Visa.
The most common vehicle in Bahrain is the With Limited Liability Company (WLL). Investors who set up a company in Bahrain can take 100% foreign ownership, regardless of whether the company is a WLL, a partnership, a branch or a representative office. Exceptions to 100% foreign ownership are companies that engage in reserved business activities and public shareholding companies in which foreign investors are restricted to a maximum 49% stake.
Bahrain is home to three special economic zones. The Bahrain Logistics Zone was established in 2008 next to Khalifa bin Salman port, the island’s main harbour, and focuses on third-party logistics, storage and distribution. Bahrain International Airport offers cargo facilities, offices and retail space; the foreign trade zone has no customs duties. Bahrain International Investment Park (BIIP) offers 100% foreign ownership of companies, duty-free access to GCC markets, exemption from 5% import duties on both raw materials and equipment and 100% repatriation of capital.
Sovereign Bahrain can also assist with the following countries – Kuwait, Qatar, Saudi Arabia, Oman, Jordan, the Lebanon, Iraq and Libya.
Central Bank of Bahrain – www.cbb.gov.bh
Bahrain Economic Development Board – www.bahrainedb.com
Nationality, Passports and Residence Affairs (NPRA) – www.npra.gov.bh