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Gulf financial hub with 0% corporate and personal tax
Region
MIDDLE EAST
Corporate Tax
0%
Setup Time
2 weeks
Currency
BHD
Bahrain, an island kingdom in the Persian Gulf, has differentiated itself within the GCC through progressive financial regulation and openness to foreign investment. The country's company registration framework and strategic positioning make it attractive for business setup in the Middle East.
With a population of 1.5 million, Bahrain offers modern Gulf living on a more accessible scale than larger neighbors. Arabic is official, but English is widely used in business. The island's compact size means short commutes and easy access to amenities.
Healthcare is good, with both public and private facilities. The climate is hot and humid, particularly from May through September. Safety is excellent, with very low crime rates. Cultural amenities have expanded, including museums, dining, and entertainment options.
The expatriate-friendly environment includes tolerance for diverse lifestyles uncommon in some neighboring countries, though Bahrain remains a conservative society by Western standards.
Corporate tax applies only to oil and gas companies at 46%. Other businesses face no corporate income tax. Personal income tax does not exist. VAT applies at 10%. This tax profile, combined with investment treaty protections, supports international business setup.
The Central Bank of Bahrain provides sophisticated financial regulation. The Economic Development Board actively supports foreign investment. Bahrain's free trade agreement with the United States and GCC membership provide market access advantages.
Company registration through the Ministry of Industry and Commerce is efficient. Limited liability companies and closed joint stock companies are common structures. The new Commercial Companies Law permits 100% foreign ownership in most sectors.
Company formation typically takes 1-2 weeks. Minimum capital requirements are modest for most structures. At least one manager is required for LLCs. The SIJILAT business portal has modernized registration processes, making company formation increasingly digital.
Bahrain established a comprehensive crypto license framework through the Central Bank's crypto-asset module. This sandbox-to-license approach has attracted digital asset businesses seeking regulated status in the Middle East.
The regulatory approach balances innovation with consumer protection, providing clarity for exchanges, custodians, and related services. Bahrain positioned itself early in the regional crypto regulation landscape, gaining competitive advantage.
Gambling is prohibited under Bahrain law, reflecting Islamic principles. No gambling license framework exists, and gambling activities are illegal. Businesses in the gaming sector must look to other jurisdictions.
Bahrain's small domestic market limits purely local opportunities, but its position as a financial hub serves regional and international business. The kingdom's stable political environment within the GCC provides business continuity confidence.
Banking access is excellent, with numerous international and regional banks. The Bahraini dinar is pegged to the US dollar, providing currency stability. Professional services are well-developed for the financial sector.
Bahrain suits financial services firms, fintech companies, and businesses seeking a progressive Middle Eastern base with strong regulatory frameworks for their business setup.
Local: WLL
Local: BSC
Local: Branch
| Corporate Tax Rate | 0% |
| Personal Income Tax Rate | 0% |
| VAT / Sales Tax | 10% |
| Capital Gains Tax | 0% |
| Withholding Tax | 0% |
| Reduced Corporate Tax Available | No |
| Non-Resident Withholding Exempt | Yes |
| Tax Treaty Network | Yes |
| Banking Access | HIGH |
| Financial Privacy | MEDIUM |
| Currency Controls | NONE |
| Local Bank Account Required | Yes |
| Non-Resident Bank Account Allowed | No |
| Physical Presence for Banking | Yes |
| Banks Restrictive (High Risk) | No |
| AML Officer Required | No |
| MLRO Required | No |
| Compliance Officer Required | No |
| Data Protection Officer Required | No |
| Bookkeeping Frequency | Annual |
| Local Bookkeeping Required | Yes |
| Mandatory Audit | Yes |
| License Required | Yes |
| Local Director Required | No |
| Local AML Director Required | Yes |
| Local Legal Address Required | Yes |
| Local Physical Office Required | Yes |
| Required Share Capital | $25,000 |
| Capital Maintained in Account | Yes |
| Compliance Program Required | Yes |
| Travel Rule Compliance | FATF Travel Rule compliant |
| Business Plan Required | Detailed business plan including operational model, target market, risk management framework, AML/CFT policies, and 3-year financial projections required |
| Personnel Required | CEO, Compliance Officer, Money Laundering Reporting Officer (MLRO), and qualified operational staff with CBB approval required for controlled functions |
| Insurance Required | Yes |
| Insurance Details | Professional indemnity insurance minimum BHD 100,000 required |
| Remote Incorporation Possible | No |
| 100% Foreign Ownership | Yes |
| Min. Shareholders | 1 |
| Min. Directors | 1 |
| Shareholder/Director Same Person | Yes |
| Registry Public | No |
| Registry Access | CBB maintains registry of licensed crypto-asset service providers |
| Renewal Period | Annual |
| Accounting Filing Required | Yes |
| Accounting Filing Frequency | Annual |
| Financial Statement Required | Yes |
| Financial Statement Frequency | Annual |
| Accounting Audit Mandatory | Yes |
| Compliance Audit Mandatory | Yes |
| Technical Audit Mandatory | Yes |
| Corporate Income Tax Applicable | No |
| Dividend Tax Applicable | No |
| Capital Gains Tax Applicable | No |
| Territorial Tax Regime | No |
| VAT Applicable | Yes |
| Regulators | Central Bank of Bahrain (CBB) |
| Licensing Fee | $100 |
| Licensing Fee Details | BHD 100 non-refundable application fee plus annual fees of 0.25% of operational costs (BHD 2,000-6,000 range). Category 1: BHD 25,000 minimum capital; Category 2: BHD 50,000; Category 3: BHD 100,000; Category 4 (Exchange): BHD 300,000 |
| Permitted Business Models | Crypto-asset exchange, Custody services, Portfolio management, Advisory services, Trading as principal or agent |
| Permitted Activities | Trading, custody, advisory, portfolio management, exchange operations, digital token offerings |
| Restricted Activities | Must only deal in CBB-approved crypto-assets; privacy coins may face restrictions |
| Cross-Border Service Allowed | Yes |
| Physical Inspection Required | Yes |
| Derivatives Allowed | No |
| RWA Tokenization Allowed | Yes |
| App Store Listing Allowed | Yes |
| Crypto Custody Allowed | Yes |
All forms of gambling are illegal in Bahrain under Article 308 of the Penal Code. Penalties include imprisonment up to 3 months and fines up to BHD 300. No gambling licenses are issued.
| License Required | Yes |
| Local Director Required | Yes |
| Local AML Director Required | Yes |
| Local Legal Address Required | Yes |
| Local Physical Office Required | Yes |
| Required Share Capital | $100,000 |
| Capital Maintained in Account | Yes |
| Compliance Program Required | Yes |
| Travel Rule Compliance | FATF compliant |
| Business Plan Required | Comprehensive 3-year business plan with financial projections, risk management framework, governance structure, and operational model required |
| Personnel Required | CEO, Compliance Officer, MLRO, CFO, and other controlled functions requiring CBB approval |
| Insurance Required | Yes |
| Insurance Details | Professional indemnity insurance required; amount varies by license type |
| Remote Incorporation Possible | No |
| 100% Foreign Ownership | Yes |
| Min. Shareholders | 1 |
| Min. Directors | 2 |
| Shareholder/Director Same Person | Yes |
| Registry Public | Yes |
| Registry Access | CBB publishes list of licensed financial institutions |
| Renewal Period | Annual |
| Accounting Filing Required | Yes |
| Accounting Filing Frequency | Annual |
| Financial Statement Required | Yes |
| Financial Statement Frequency | Quarterly and Annual |
| Accounting Audit Mandatory | Yes |
| Compliance Audit Mandatory | Yes |
| Technical Audit Mandatory | No |
| Corporate Income Tax Applicable | No |
| Dividend Tax Applicable | No |
| Capital Gains Tax Applicable | No |
| Territorial Tax Regime | No |
| VAT Applicable | Yes |
| Regulators | Central Bank of Bahrain (CBB) |
| Licensing Fee | $5,000 |
| Licensing Fee Details | Application fees vary by license type. EMI/PSP licenses: application fee plus annual supervision fees. Bank licenses require significantly higher capital (retail banks: BHD 25 million minimum). Fees depend on specific regulated activity category under CBB Rulebook Volume 5. |
| Permitted Business Models | EMI, Payment Service Provider, Financing Company, Money Changer, Trust Service Provider, Investment Firm |
| Permitted Activities | Electronic money issuance, payment processing, money transfers, digital wallets, prepaid cards, remittance services |
| Restricted Activities | Banking activities (deposits, lending) require full banking license; insurance requires separate insurance license |
| Cross-Border Service Allowed | Yes |
| Physical Inspection Required | Yes |