Tax rates in Bahrain
Tax Rates
Consumption Taxes
- Nature of the Tax
-
Value-added tax (introduced on 1 January 2019)
- Tax Rate
-
5%
- Reduced Tax Rate
-
Basic foodstuffs; domestic and international transport; new properties; healthcare; exports of goods and services; high-value metals; domestic oil and gas; education; and medicine and medical equipment are zero-rated.
The supply of bare land and buildings, specific financial services, and certain imported goods are exempt.
- Other Consumption Taxes
-
Tobacco products and energy drinks are subject to excise tax at 100%, while carbonated drinks are subject to excise tax at 50%. Further goods may also become subject to excise tax in the future.
Find out more about Taxes and Accounting in Bahrain on GlobalTrade.net, the Directory for International Trade Service Providers.
Corporate Taxes
- Company Tax
-
None, except for oil companies, at a 46% rate of net profits
- Tax Rate For Foreign Companies
-
Only entities that operate in the oil and gas sector or derive profits from the extraction or refinement of hydrocarbons are taxed in Bahrain.
- Capital Gains Taxation
-
Capital gains are not taxed in Bahrain.
- Main Allowable Deductions and Tax Credits
-
Bahraini laws provide for deductions for nearly all costs associated with taxable activities in the country, such as the cost of production, refinement, remuneration of employees associated with these taxable activities (including social insurance and pensions paid for the benefit of these employees), and other operational losses.
All reasonable and justifiable costs of production and exploration of products sold during the current taxable year are deductible for tax purposes, if these expenses have not been deducted elsewhere in calculating net taxable income.
All taxes and duties not imposed by the Bahrain income tax law - such as customs duties - can also be deducted from taxable income.
Unutilised losses may be carried forward indefinitely and deducted up to an amount equivalent to the net income. Carryback of losses is not permitted.
- Other Corporate Taxes
-
Other taxes include:
- registration and licence fees: companies are subject to registration fees (from BHD 25 to 1,000) and licence fees that vary according to the nature of their activity
- stamp duty: applies to the transfer and/or registration of real estate only and is levied at a rate of 2%. If the duty is paid within 60 days following the transaction date, the rate of the stamp duty is reduced to 1.7%
- municipality tax: levied on the rental of commercial and residential property to expatriates at a rate of 10%
- social security contribution: employer's social security contribution is 12% for Bahraini workers and 3% for non-Bahraini workers, calculated on a maximum monthly earning capped at BHD 4,000
- a 10% levy is imposed on the gross turnover of hotels and first-grade restaurants.
- Other Domestic Resources
-
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
Country Comparison For Corporate Taxation
|
Bahrain |
Middle East & North Africa |
United States |
Germany |
Number of Payments of Taxes per Year |
3.0 |
20.8 |
10.6 |
9.0 |
Time Taken For Administrative Formalities (Hours) |
22.5 |
195.1 |
175.0 |
218.0 |
Total Share of Taxes (% of Profit) |
13.8 |
32.1 |
36.6 |
48.8 |
Source:
Doing Business,
Latest available data.
Individual Taxes
Tax Rate
Individual income tax |
Bahrain does not apply any personal income tax |
- Allowable Deductions and Tax Credits
-
No personal income tax is levied in Bahrain.
- Special Expatriate Tax Regime
-
Income of residents or non-residents paid outside Bahrain are not subject to tax or social insurance rules.
Double Taxation Treaties
- Countries With Whom a Double Taxation Treaty Have Been Signed
-
The list of tax treaties signed by Bahrain.
- Withholding Taxes
-
No whitholding taxes (interests, dividends, royalties) are levied in Bahrain.
Find out more about Taxes and Accounting in Bahrain on GlobalTrade.net, the Directory for International Trade Service Providers.
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Latest Update: April 2022