Bahrain flag Bahrain: Business Environment

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.
 

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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: c
ompanies 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.

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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.

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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.

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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