Executive Summary
The Kingdom of Bahrain is located in the Persian Gulf. Qatar and Saudi Arabia are the neighbour countries of Bahrain. The country covers a total area of 665 sq km. Manama is its capital, Arabic is its official language.

Bahrain is a constitutional monarchy, the King is the head of the country. It has a bicameral parliament to which legislative power belongs. The Prime Minister is the head of the Cabinet.

Thanks to the oil boom, Bahrain has the fastest growing and the freest economy in the Middle East. Export is mainly based on petroleum products. Among other natural resources natural gas and fish stocks must be mentioned. However, high unemployment rate is still one of major problems of the country. The government has started to popularize economic diversification policy, bringing construction projects to realization, as well as developing tourism. In addition, Bahrain was the first country of the region that introduced unemployment benefit system as an integrated part of important labour reforms.

The Bahrain Dinar (BHD) is the national currency.

Bahrain is an archipelago which consists of thirty-three islands. The territory of Bahrain is mainly flat and arid. Jabal ad Dukhan is its highest point, which reaches 134 metres of height above the sea level. Large desert territories are characteristic to the country; approximately 2,9% of its land can be used for agricultural purposes.

Desertification which results from degradation of arable land, coastal damages and water pollution caused by oil-related industries proceeds, are main environmental issues of the country.

Bahrain generally has hot humid summers and comparatively cool winters. Rainfalls are irregular and minimal. Frequent winds from Iraq and Saudi Arabia bring fine dust particles, resulting in a limited visibility, particularly during the months of June and July.

Map, Flag and Coat of Arm

Types of Company

General Partnership
Citizens of Bahrain can become general partners of a partnership, who cooperate together under a common name and have unlimited liability for the obligations of a partnership.

Limited Partnership
This type of company is not popular in Bahrain, and a Limited Liability Company is often chosen for incorporation rather than a Limited Partnership.

Association in Participation
This type of structure is generally formed for realizing specific projects.

Joint Stock Company
All the members of this type of company must be citizens of Bahrain, and this is usually a public company which undertakes banking or insurance business.

Closed Joint Stock Company
Foreigners can be shareholders of this type of company.

Limited Liability Company
It is a widely used type of company in Bahrain. If a company participates in manufacturing or services market segment, it may be fully owned by foreign persons. However, the government permission must be obtained, as otherwise foreign ownership may constitute only 49% of a company’s shares.

Sole Proprietorship
This type of a business structure is fully owned by one person, who can appoint a company’s administrator or administer it on his own. Due to unlimited liability, this type of company is not popular among entrepreneurs.

Holding Company
As there are no withholding taxes and other fiscal advantages, Bahrain is an attractive jurisdiction to incorporate a holding company in.

Branch of a Foreign Company
International companies are allowed to have 100% ownership of companies operating in tourism, healthcare, education and training, technology, several manufacturing and business consultancy sectors. A company may establish its branch in Bahrain upon receipt of the government permission.


Individuals are not liable to pay income tax. There are no withholding or capital gains taxes, as well as no exchange controls. Social security contributions are payable.

Companies are not liable to pay corporation tax if they do not operate in the market segment related to oil exploring and refining. Property tax is levied at different rates.
Import duties, customs duties and excise duties are levied at different rates on various goods and services. The use of free zones of Bahrain may limit or avoid payment of these taxes.
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