Setting Up a Business in Bahrain: A Practical Guide

Why founders choose Bahrain

Bahrain has no personal income tax and no general corporate income tax, a dollar-pegged currency and operating costs that are often lower than larger Gulf hubs. It also sits next to Saudi Arabia, the region's biggest market, linked by the King Fahd Causeway.

The Bahrain Economic Development Board (EDB) is the investment promotion agency and helps foreign companies with set-up, introductions and incentives. Its support is free to use.

Step 1: Choose your activity and legal form

Every business in Bahrain needs a Commercial Registration, known as a CR, issued by the Ministry of Industry and Commerce (MOIC). Your CR lists the activities you are allowed to carry out, so choose them carefully.

The most common structure for foreign founders is a With Limited Liability Company (WLL). Other options include a single person company (SPC), a branch of a foreign company and a representative office.

• WLL: two or more shareholders, the usual choice for trading and services
• Single Person Company (SPC): one owner, limited liability
• Branch of a foreign company: operates under the parent company
• Representative office: marketing and liaison only, no trading

Step 2: Check foreign ownership rules

Bahrain allows 100% foreign ownership in most commercial activities, without a local partner. Some activities remain restricted to Bahraini or GCC ownership, or need a minimum local share.

The Sijilat portal shows the ownership rules for each activity before you apply. If your activity is regulated, for example finance, healthcare or education, you will also need approval from the relevant regulator.

Step 3: Register on Sijilat

Applications are made online through Sijilat, the MOIC registration system. You reserve a trade name, select activities, upload shareholder documents and submit the memorandum of association for notarisation.

Foreign corporate shareholders usually need attested company documents from their home country. Individuals need passport copies and, in some cases, a Bahraini residence ID (CPR) or a local address.

• Trade name reservation
• Activity selection and any pre-approvals
• Memorandum and articles of association, notarised
• Commercial address (lease or approved business centre)
• Capital deposit where required, then CR issuance

Virtual CR and home-based options

Bahrain offers a virtual commercial registration called Sijili, which lets individuals trade certain activities without a physical office. MOIC's guidance presents it mainly for Bahraini investors, so foreign founders should confirm eligibility on Sijilat before planning around it.

Foreign founders who do qualify for a standard CR can often use a licensed business centre address to keep early costs down.

Costs and timelines

Government fees for a standard CR are modest, but total set-up costs depend on your activity, office and advisers. As an indicative range, a straightforward services company often costs from around BHD 1,000 to 3,000 to set up, before office rent and staff.

Simple registrations can complete in one to three weeks once documents are ready. Regulated activities, attested foreign documents and bank account opening can each add weeks.

Banking for your company

Corporate accounts are opened with local and international banks licensed by the Central Bank of Bahrain. Banks run full due diligence on shareholders and the business plan, so have your CR, ownership chart, IDs and source of funds ready.

Opening is usually smoother once at least one shareholder or manager holds a Bahrain residence ID.

Tax: VAT, no income tax and the new top-up tax

Bahrain does not levy a general corporate income tax. The exception is oil and gas, where companies are taxed at 46% on profits under a 1979 law.

From fiscal years starting on or after 1 January 2025, Bahrain applies a 15% Domestic Minimum Top-up Tax (DMTT) to large multinational groups with global revenues of at least EUR 750 million. It does not affect typical small and medium businesses or individual founders.

VAT is charged at a standard rate of 10%, and registration is mandatory once taxable supplies pass BHD 37,500 a year. Voluntary registration is possible from BHD 18,750. VAT is administered by the National Bureau for Revenue (NBR).

Hiring and LMRA work permits

Foreign employees need a work permit issued through the Labour Market Regulatory Authority (LMRA). The employer applies, pays the permit fees and sponsors the residence visa.

Bahrainisation targets set how many Bahraini nationals a company should employ, depending on the sector and size. Meeting them can reduce costs, and some sectors offer flexibility at a higher fee.

Employers also register staff with the Social Insurance Organisation (SIO) and pay monthly contributions, which now include end-of-service contributions for foreign employees.

Freelance and flexible options

Bahrain's original flexi permit, which let workers sponsor themselves, was replaced in 2023 by a labour registration programme run through LMRA-approved centres. Rules have continued to change, so check the LMRA site for the current options.

Golden Residency holders keep their residency whatever happens to their job or company. Working for an employer still needs an LMRA work permit, which the employer applies for, but the residency itself is not tied to a sponsor.

Residency for investors

Owning a company can support an investor visa for the shareholder, issued through the CR and LMRA. Many business owners also secure the 10-year Golden Residency separately through property worth BHD 130,000 or more, so their residency is not tied to the company.

Questions people ask.

Sources: Bahrain Golden Residency, official site · Ministry of Industry and Commerce · Sijilat commercial registration portal · Bahrain Economic Development Board · National Bureau for Revenue · Labour Market Regulatory Authority · Social Insurance Organisation · Central Bank of Bahrain · EY: Bahrain issues domestic minimum top-up tax legislation