Company Incorporation in Bahrain

The Kingdom of Bahrain is a small Arab state that is located on the bay of the southwestern coast of the Persian Gulf. With Manama as the capital city, the country shares its borders with Qatar and Saudi Arabia, which turns out to be an easy route to enter the international market. Bahrain is one of the popular destinations in the Middle East and has been establishing its identity as one of the famous grounds when it comes to business incorporation. The Doing Business 2020 report recognizes Bahrain as one of the top-ten improved economies of the world. Even though the region has a stronghold in the oil sector, the year of 2018 has been a year of remarkable change as the region spiked in the annual real GDP growth rate at 2.2 percent with a growth of 3 percent in the non-oil segment.

The Bahraini government has set new laws and regulations that would allow the business investors to invest in a suitable segment across a broad spectrum of business activities. Foreign investors do look forward to registering a foreign company in Bahrain as it turns out way more profitable.

Bahrain Economic Outlook

Bahrain has been transforming itself towards establishing a robust non-oil sector to leverage the nation’s growth. The below figures explain Bahrain’s growth over the years.

Bahrain’s economic outlook highlights the broadest range of business opportunities that global investors can focus on investing. Here’s how economic growth impacts business in Bahrain.

Business Opportunities in Bahrain

The ground of Bahrain holds multiple growth opportunities that help a foreigner to start a business in Bahrain across multiple business sectors. Some of the focused-business sectors that hold immense opportunities are:

  • Tourism and Travel
  • Hospitality
  • E-Commerce
  • FinTech
  • Financial Services
  • Wholesale and Retail
  • Transport and Storage
  • Aluminum
  • Petrochemicals and Plastics
  • Garments / Textile
  • Engineering
  • Handicrafts
  • Manufacturing
  • Logistics
  • Information, Communication, and Technology (ICT)
  • Small and Medium Industries

Restricted Business Activities

The Government of Bahrain has implied certain restrictions on trading activities that deal with:

  • Alcohol manufacturing
  • Gambling
  • Narcotics manufacturing
  • Weapons manufacturing
  • Cigarettes manufacturing
  • Manufacturing of Asbestos and its products
  • Importing of:
    • All types of waste and treatment
    • Radioactive materials
    • Toxic waste
    • Restricted chemicals

How to Start a Business in Bahrain?

To start a business in Bahrain, business investors need to go through the following steps:

1. Selection of a Legal Structure

Business investors need to be clear regarding the business structure that is based on the availability of the shareholders and shares capital.

2. Choose a Trade Name

Selecting the business trade name is the next move for business investors. While choosing a name for a Bahraini company, absolute essentials are to be taken care of as per the Bahraini trade name law.

  • It should be new and innovative.
  • It should be unique to another trademark or trade name
  • It shouldn’t be registered in the Registry books
  • A Bahraini trade name may be registered in Arabic or any other foreign language backed by an Arabic translation.
  • It shouldn’t sound offensive
  • It shouldn’t contain any religious content
  • It shouldn’t breach public orders and morals

An application needs to be submitted to the Ministry with a set of essential documents. The Directorate shall put forward its decision of accepting or rejecting the same within not more than ten (10) days.

3. Register the Commercial Papers

The set of commercial papers that needs to be submitted to the respective Government Authorities include the following:

  • Passport and Bahraini visa of the shareholder(s)
  • Duly filled company registration application form
  • Drafted Memorandum and Articles of Association
  • Board of Director’s resolution resolving to start a business in Bahrain
  • Identity proofs of the company’s representatives
  • The CV of each business partner
  • List of business activities
  • Bank reference letter
  • NOC from sponsor
  • Appointment letter, Power of attorney, Specimen signature
  • The lease agreement of the company’s commercial address

4. Gather the Required Licenses

A business license is a legal permit that needs to be obtained by business entities in Bahrain. After crucial scrutiny of the documents provided, the respective Government Authorities will issue the business license.

5. Commence Business Activities

Once the business license is obtained, the business owners/ investors can proceed ahead to conduct the relevant business activities.

However, it is to be noted that managing the business entity is the core challenge after incorporation. A business owner needs to initiate to infuse multiple services like accounting, audit, etc. Here are five things to do after setting up your business in Bahrain.

Types of Business Entities in Bahrain

The Kingdom of Bahrain allows business investors to select different types of business entities in Bahrain to commence business activities.

1. With Limited Liability Company

In a With Limited Liability (WLL) company in Bahrain, the partners are responsible for the debts and liabilities of the company only to the extent of their shareholding in the capital. It is the most commonly incorporated business entity by foreign entrepreneurs looking to set up a business in Bahrain because of its fewer requirements to pass resolutions than any other business structures in Bahrain.

2. Partnership Company

Two or more parties can form a Partnership Company in Bahrain by signing an agreement to share profits and losses under a specific collective trade name for a commercial purpose. The law has no provisions concerning the minimum or maximum capital required of a partnership or the maximum number of partners allowed.

3. Bahrain Shareholding Company – Public

A Public Shareholding Company, or a Public Joint Stock Company, in Bahrain must have a minimum of 7 shareholders who subscribe to it by way of negotiable shares. This type of company is ideal for business people looking to list their company in the Bahrain Bourse (BHB) and offering its shares to the public.

4. Bahrain Shareholding Company – Closed

A Closed Shareholding Company, or a Closed Joint Stock Company, in Bahrain consists of minimum 2 shareholders who subscribe to it by way of negotiable shares that are not offered to the public for subscription. Such a company can be entirely owned by a foreign national.

5. Single Person Company

A Single Person Company (SPC) in Bahrain is very similar to a Sole Proprietorship but is a company with limited liability. It means that the shareholder’s liability is limited to the extent of their capital in the company.

6. Single Commandite Company

A Simple Commandite Company in Bahrain is a limited partnership that is established between 2 or more partners, who are jointly liable to the extent of their wealth for the company's obligations and other partners who have invested in the company but are not involved in the management.

7. Branch of a Foreign Company

A Branch Office in Bahrain is meant for companies incorporated and registered outside Bahrain who want to start their offshoot in Bahrain to carry out certain activities.

List of Free Zones in Bahrain

Designed strategically, the Free Trade Zones in Bahrain helps the business investors to experience a specialized infrastructure with world-class facilities. With a multi-modal connectivity route, the destinations help the business investors to carry out their business operations at ease. The Kingdom of Bahrain boasts three Free Trade Zones (FTZs) that includes:

1. Bahrain Logistics Zone (BLZ)

Bahrain’s Logistics Zone (BLZ) is regulated and managed by the Ports and Maritime Affairs at the Ministry of Transportation and Telecommunications. Located along 1-2 km of land, the BLZ turns out to be an ideal place for a more straightforward and cheaper logistics business. Designed to suit the end-to-end requirements, the BLZ provides tailored solutions satisfying the business needs. The dedicated zone allows business owners to commence from the following business activities:

  • Logistics support services
  • Regional distribution of exporting of finished goods
  • Processing, assembling, and packaging
  • Warehousing of products
  • Travel agencies
  • Consulting and management services

Here’s more information about Bahrain Logistics Zone.

2. Bahrain International Investment Park (BIIP)

Established in the year 2005, the Bahrain International Investment Park (BIIP) is Bahrain’s flagship site that has been built to attract multinational and export-oriented global businesses. Designed to attract Foreign Direct Investment (FDI), the region of BIIP is one of Bahrain’s free zone that provides multiple business options to foreign investors. The companies located in the BIIP enjoy the duty-free access to carry out the business operations in the Kingdom of Saudi Arabia, the United Arab Emirates, and Oman. The list of business activities permitted in the BIIP includes:

  • Food processing and packaging
  • Aluminum melting, rolling and export
  • Iron and steel manufacturing
  • Medical devices
  • Pharmaceutical products
  • Manufacturing of construction and building material
  • Material and Chemical processing such as plastics, fiberglass, petrochemicals
  • Information Technology (IT/ITES)
  • Consumer goods like garments, textiles, electronics, etc.
  • Initiating international services related to consulting, marketing, etc.

Here’s more information about Bahrain International Investment Park (BIIP).

3. Bahrain International Airport (BIA)

The Bahrain International Airport (BIA) was established in the year 1927 as the first airport in the Arabian Gulf, has been a magnificent business setup local for global investors. Located in Muharraq, the island is situated in the northeast of Manama, the capital city. The free zone is maintained by the Bahrain Airport Company (BAC), a wholly-owned subsidiary by Mumtalakat.

The BIA is one of the critical drives of Bahrain’s economy and is reputed in aviation and financial centre. Some of the specialized business categories available in the Bahrain International Airport (BIA) includes:

  • Air cargo packaging and dispatching centers
  • Freight forwarding services
  • Air cargo aircraft handling
  • Ground cooling system for maintaining fresh cargo
  • Additional aircraft parking bays
  • Modern fuel farm for fuel storage
  • Energy and water-efficient buildings
  • The capacity of handling 14 million passengers

Here’s more information about Bahrain International Airport (BIA).

Special Economic Zones in Bahrain

The Government of the Kingdom of Bahrain has initiated the concept of Special Economic Zones (SEZs) which includes:

1. Sheikh Khalifa bin Salman Port (KBSP)

The Sheikh Khalifa bin Salman Port (KBSP) is another driving destination that has been inaugurated in the year 2009. Located in the middle of the Arabian Gulf, the site is one of the major regional port distribution centers. The strategic location allows the business owners to carry out the business activities in the Upper Gulf region covering Kuwait, Iraq, Saudi Arabia, Qatar, and northern Iran. The zone also offers excellent connectivity with the Bahrain Logistics Zone (BLZ) as a gateway for shipment of goods. The different types of cargo handled in the KBSP includes:

  • General Cargo
  • Roll-on and Roll-off Cargo
  • Passenger Services

The Port and Maritime Affairs supervises and regulates the relevant functions with the concession agreement.

Here’s more information about Sheikh Khalifa bin Salman Port (KBSP).

2. Bahrain Investment Wharf (BIW)

Bahrain’s Investment Wharf (BIW) is one of the most significant developmental projects in the Kingdom of Bahrain, covering an area of 1.7 million square meters in the Al Hidd Industrial Zone. The ground is a hybrid platform for industries, business, logistics, information technology, commercial, and residential development. The area has also helped Bahrain’s light and medium manufacturing industries of textile, rubber and plastics, light electronics, fabricated metal products, electrical machinery, paper, chemicals, and furniture.

Here’s more information about Bahrain Investment Wharf (BIW).

Tax Scenario in Bahrain

The Bahraini government has set the business investors burden-free when it comes to the taxation process. Any business investor who establishes a company in Bahrain is free from the following list:

  • Corporate Income Tax (CIT)
  • Withholding Tax (WHT)
  • Transfer pricing
  • Capital Gain Tax (CGT)
  • Personal Income Tax (PIT)

Apart from the types of taxes mentioned above, there are other taxes like:

  • Municipality Tax- gets levied on commercial and residential property at a rate of 10%.
  • Stamp Duty- applies to all transfer and registration of real estate, levied at 2%.
  • Payroll Taxes- for Bahraini workers: 12%, for Non-Bahraini workers:2%
  • Custom Duty- is usually charged at a rate of 5%
    • Charges for alcoholic beverages: 125%
    • Charges for cigarettes: 100%

VAT Scenario in Bahrain

Being a part of the GCC countries, the Kingdom of Bahrain has imposed a VAT charge of 5 percent on 1st Jan 2019. However, according to the National Bureau of Revenue (NBR), the governing authority in Bahrain, VAT will not be implemented on the following goods:

  • Basic food products
  • General medical services
  • Passenger transport services
  • Oil and gas sector
  • International air tickets

The VAT collection process in Bahrain can be adequately understood by going through the following illustration:

Tax-Group Option

Another benefit that drives the business investors to set up a business in Bahrain is the availability of the option of opting for a tax-group. A tax-group is a legal group of business entities who are entitled to share the tax amount, as they are treated as one business entity.

Why Invest in Bahrain?

Business investors prefer to proceed ahead with the option of company incorporation in Bahrain because the region provides numerous benefits, which includes the following:

  • The Kingdom of Bahrain is strategically located that helps the business investors to enter the international market and expand their business.
  • Holds a favorable business environment that allows business entities ranging from a start-up to an established business to find Bahrain as a suitable business ground.
  • Bahrain is one of the top business investment destinations in the GCC market.
  • Gateway to GCC’s $1.5tn market.
  • Complete foreign ownership.
  • The high and efficient workforce is available in the region.
  • Bahrain is one of the top tourist destinations that attract millions of foreign nationals.
  • The region holds a diversified culture.
  • Robust network and connectivity through air, sea, and waterways that eases the way of conducting business operations.

Business owners have got a wide spectrum of business investment options to invest in Bahrain.

  • The region of Bahrain holds a low company setup cost.

Over the years, global investors avail multiple advantages of setting up a business in Bahrain, which has boosted the economy to a great extent.  Investors need to consider various factors while proceeding for investing in the market as a proper analysis needs to be done to understand the relevant factors of business investment. Here are the five quintessential reasons to invest in Bahrain.

Bahrain Double Taxation Treaties (DTT)

A double taxation agreement/ treaty helps the importers and exporters to exempt the tax levied on both the sides during an import-export activity. Bahrain has got several tax treaties with different countries that allow the business owners to carry out the transactions tax-free, which includes:















Isle of Man



Sri Lanka





Czech Republic












Republic of Korea




United Kingdom

Bahraini Government Initiatives

The Government of Bahrain has been taking multiple steps to establish the ground as one of the top business investment platforms. The region aims at attracting the attention of global investors to a great extent. Over the years, multiple initiatives have been initiated, which includes:

  • Simplify the Business Incorporation Process
  • Advancing the connectivity
  • 80% lower visa fees
  • Introduction of E-Visas for tourists
  • Introduction of investment visas
  • Sustainable Development Goals (SDG)
  • FinTech Regulatory Sandbox
  • Initiating Startup Bahrain
  • The Government Action Plan (2019-2022)
  • Bahrain Economic Vision 2030
  • Tamkeen’s Strategy
  • National Development Strategy
  • Digitalizing Bahrain
  • Sijilat System
  • eMeeting++ System
  • Bahrain National Enterprise Architecture Framework (NEAF)
  • Integrated Workflow Management System “Zajel”
  • Tasareeh System
  • The National Authentication Framework Project (eKey System)
  • The National Suggestion and Complaints System “Tawasul”
  • Qudurat Training Program

Implementation of all the initiatives mentioned above would boost the business foundations in the region.

On-going Projects in Bahrain

The future of Bahrain is bright for global business investors to step-in and invest in the region. The Government has been initiating multiple steps to outstand the area as one of the top business investment platforms. Some of the on-going mega projects in Bahrain include:

  • Al- Sidra
  • Al-Tijaria Tower
  • Waterfront Harbour Row
  • Water Garden City
  • Hidd Heights
  • Fontana Infinity

This implies that starting a business in Bahrain turns out to be a profitable and smart-investment decision. Proceeding ahead with a business expert is a feasible option to complete the proceedings at one go.

Why Business Setup Worldwide?

Business Setup Worldwide is keen to provide the best and simple business setup solutions by assisting in the core process of company registration, incorporation and solving particular legal matters. Our business expert holds in-depth industry knowledge and are well-versed with the Bahrain company incorporation laws that help them to provide tailored solutions at ease.

By being a part of the BSW family, you get the opportunity to experience the following services:

  • Hassle-free documentation handling process
  • 24/7 assistance
  • Legal compliances are carried out at ease
  • On-time delivery of projects
  • Smooth communication process

If you are looking forward to setting up a business in Bahrain, then Business Setup Worldwide can assist you in clearing all the legal proceedings within a short span effectively and efficiently. Contact us today to have a word with our advisors-we’d be glad to assist.


1. Can a foreigner own 100% of the business in Bahrain?


2. What is the corporate tax rate in Bahrain?


3. Is it mandatory to be physically present for company incorporation in Bahrain?

Yes, a physical signature is required.

4. What is the import business scenario in Bahrain?

32.60% increase in imports.

5. Which government are authorities involved in business incorporation in Bahrain?

Nationality Passport and Residency Affairs
The Ministry of Industry Commerce and Tourism
Labor Market Regulatory Authority
Ministry of Works, Municipalities Affairs & Urban Planning
Other licensing authorities according to the type of business.

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