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Company Formation in Bahrain

Overview :

Bahrain is one of the most diversified economies in the Persian Gulf. Highly developed communication and transport facilities make Bahrain home to numerous multinational firms with business in the Gulf. As part of its diversification plans, Bahrain implemented a Free Trade Agreement (FTA) with the US in August 2006, the first FTA between the US and a Gulf state. Bahrain’s economy, however, continues to depend heavily on oil.


Advantages of incorporating business in Bahrain:
  • Bahrain’s strategic location at the heart of the Gulf is the most central place in the Middle East to position your business, giving you the fastest access to export markets for your goods and services throughout the region.
  • In Bahrain, you can retain 100% foreign ownership and benefit from the region’s lowest taxes. You can freely repatriate capital, profits and dividends.
  • Bahrain has a regulatory regime that provides a free, open and transparent environment that fosters growth. Our legal system protects companies’ rights, while our free market environment allows businesses to thrive.
  • Finally, Bahrain has the lowest taxes in the GCC, with no corporation, income, value-added or withholding tax. There are also no capital gains or wealth taxes, and no inheritance taxes or death duties.

Tax Regime in Bahrain :
  • There is no personal income tax in Bahrain.
  • Stamp duty – Stamp duty is levied on property transfers on the basis of the property value as follows: 1.5% up to BHD; 70,000; 2% from BHD 70,001 to BHD 120,000; and 3% for amounts exceeding BHD 120,001.
  • There is no corporate tax in Bahrain. Bahrain corporation tax system taxes only income of oil companies at a flat tax rate of 46%.

Types of Entities
Joint Stock Company :

A joint stock company is a pure shareholding company in which all of the members are liable for company debts to the extent of the nominal value of their shares. This type of company can take the form of an exempt joint stock company, a closed joint stock company or a public joint stock company. While the latter type requires a minimum of 51% Bahraini ownership, the exempt and closed joint stock companies may be 100% foreign owned. All forms of the joint stock company must maintain permanent offices in Bahrain.


Limited Liability Company :

The limited liability company, a shareholding company the shares of which are not open to public subscription, is one of the forms of doing business most commonly used by foreign investors. The company must have at least two and no more than 50 shareholders who are liable for the debts of the company only to the extent of their respective interest in the capital. At least one shareholder must be a Bahraini national, and the total shareholdings by Bahrainis may not be less than 51%. The words “With Limited Liability” must follow the name of the company.


General Partnership :

A general partnership must be comprised of two or more Bahraini nationals; foreign investors can participate in partnerships, but Bahraini national participation must be at least 51%. In a partnership, the liability of the partners is unlimited, and they are jointly and severally liable with respect to the partnership’s obligations to the entire extent of their assets. The name of the partnership must consist of the name of one or more of the partners adding thereto the words “Bahraini Partnership” or an indication that a partnership exists.


Limited Partnership :

A limited partnership is comprised of at least one general partner and one limited partner. The extent of a limited partner’s liability for the partnership’s commitments is restricted to the amount of capital invested by the limited partner in the partnership


Partnership Limited by Shares:

A partnership limited by shares consists of at least one general partner and at least ten shareholders. Management is the responsibility of the general partners and they are liable, to the extent of their entire assets, for the debts and commitments of the partnership.


Joint Venture:

A joint venture, also known as an association in participation, is a company that does not enjoy a separate legal personality. Joint ventures are formed by the conclusion of a Memorandum of Association specifying the rights and obligations of the partners and the division of profits and losses. Joint ventures are not subject to any prescribed formalities.


Time period:- 

Usually, it takes around 9-10 days to form a company in Bahrain.