Tax rates in Bahrain

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.

Tax Rate

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.