Bahrain raises the SME ceiling to BHD20 million
Bahrain has significantly expanded its SME definition, increasing the medium enterprise threshold to 250 employees or BHD20 million in annual revenue. More businesses can now qualify for SME status, opening access to government support, preferential financing, procurement advantages and programmes designed to help companies grow and expand.
Bahrain has widened its official definition of micro, small and medium enterprises (MSMEs) for the first time since 2017. The measure was introduced by Ministerial Decision No. 23 of 2026, issued by the Minister of Industry and Commerce Abdulla bin Adel Fakhro and published in the Official Gazette on 11 June. It came into force the following day.
The effect is not cosmetic. The ceiling for a medium enterprise is now expanded to 250 employees or BHD20 million (USD53 million) in annual revenue, which means many companies that were previously classified as large enterprises now fall inside the SME definition and can gain access to the support programmes, financing and procurement preferences that attach to that status.
What has changed?
By repealing Ministerial Decision No. 229 of 2017, the classifications of micro, small and medium enterprises are redefined as follows:
| Classification | Until 11 June 2026 | From 12 June 2026 |
|---|---|---|
| Micro | Up to five employees; annual revenue up to BHD50,000 | Up to five employees; annual revenue up to BHD300,000 |
| Small | Six to 50 employees; annual revenue of more than BHD50,000 and up to BHD1 million | Six to 50 employees; annual revenue of more than BHD300,000 and up to BHD4 million |
| Medium | 51 to 100 employees; annual revenue of more than BHD1 million and up to BHD3 million | 51 to 250 employees; annual revenue of more than BHD4 million and up to BHD20 million |
The new Decision also changes how the two tests interact. It sets out the employee count and annual revenue as separate criteria, and provides that either one of them, or both, may be used in determining a classification, in accordance with a guide to be issued by the Ministry’s SME directorate.
The 2017 rules contained an express tie-break, applying whichever measure better reflected the enterprise’s real position. That has been removed, so how the discretion is exercised in practice will depend on the guide.
Why does the SME Classification matter?
Extending the scope of a medium enterprise up to 250 employees or BHD20 million in annual revenue will greatly increase the number of businesses able to access the benefits of obtaining an SME Classification Certificate in Bahrain, which include:
• Access to several of Tamkeen’s enterprise programmes and to the Bahrain Development Bank’s (BDB) preferential profit rate on finance.
• Access to the BDB’s USD185 million SME Fund, which offers Sharia-compliant financing with repayment terms of up to five years to businesses that have been operational for at least two years.
• 10% advantage in bidding for government tenders.
• 10% advantage in bidding at auctions of public utilities held within the establishments of gov-ernment departments.
• 20% allocation of the value of government procurements and tenders to SMEs.
• Services and programmes of ‘Export Bahrain’, including funding support, credit and training.
• Future initiatives of the SMEs Development Board.
None of this is automatic. The SME Classification Certificate must be applied for online through the Ministry’s SME registration system using an advanced-level eKey account, supported by audited finan-cial statements or, for smaller enterprises, recent bank statements.
Growth cuts both ways. A company that crosses the upper limit of its band moves out of the programmes attached to it, and re-certification is evidence-based rather than self-declared. A business approaching BHD20 million in annual revenue or 250 employees should plan for this in advance rather than discover it at renewal.
What is not yet settled?
The decision requires the SME Directorate of the Ministry of Industry and Commerce to issue a guide covering SME contribution to the national economy, the SME database, and the electronic registration system through which classification certificates are issued.
At the time of writing this guide has not been published, and the Ministry’s website still carries the classification criteria document dated November 2022. Until the guide appears, how the two criteria will be applied to a business that sits in different bands on each measure remains open.
How has it been received?
The Bahrain Chamber welcomed the measure when the Cabinet approved the draft resolution in early June, stating that the updated classification criteria would enhance the effectiveness of national policies and financial programmes by enabling targeted support for enterprises at different stages of growth.
The expanded criteria now cover most of Bahrain’s business base. Even under the previous classifications, MSMEs represented 93.4% of active commercial registrations in the Kingdom, totalling nearly 85,700 businesses and employing more than 47,000 Bahrainis.
“These figures underscore the sector’s monumental role in driving economic growth, innovation and entrepreneurship, and highlight the critical importance of maintaining a supportive regulatory and legislative environment,” said the Chamber in a statement.
The Chamber also expected alignment with international standards to widen access to financing, strengthen integration into global value chains and lift productivity.
What should businesses do now?
Companies that already hold a classification certificate should check whether the new thresholds are likely to move them into a different band at their next renewal. Companies previously treated as large, particularly those turning over between BHD3 million and BHD20 million or employing between 100 and 250 people, should consider applying to gain access to SME benefits.
Businesses looking to set up in Bahrain should also factor their likely classification into how the entity is structured and staffed from the outset. SME classification is one of several points that shape how a business should be set up in Bahrain, and it is the kind of question we handle for clients every week.
Sovereign Business Hub Bahrain
Bahrain is one of the most open economies in the Middle East and North Africa (MENA) region and is well-positioned to provide investors and start-ups with investment opportunities and access to regional and international markets.
The Bahrain government is focused on encouraging foreign direct investment (FDI) in the manufacturing, logistics, information and communications technology (ICT), financial services, tourism, health and education sectors.
The Sovereign Business Hub is a business incubator and accelerator that is designed to increase the successful business set-up, development of new businesses, job creation and employment in specific sectors that are aligned with the Kingdom of Bahrain’s areas of opportunity.
Our Business Hub provides entrepreneurs, start-ups and small businesses with all the necessary support and facilities needed to achieve early growth in the GCC region, combining:
• Commercial registration and company formation in Bahrain.
• Practical support throughout the set-up process, covering office space, residency permits, operational requirements and ongoing administration and regulatory compliance.
• Serviced office and incubation space for early-stage businesses.
• Access to Sovereign’s international network and to other entrepreneurs and start-ups working across the region.
For more information, contact Nabil Khoury, Managing Partner of Sovereign Trust Consultancy (Bahrain), by phone on +973 1777 2011 or by email below.
