Why many foreign investors are looking at business set up in Bahrain

Why many foreign investors are looking at business set up in Bahrain

- Anas Al Adawi

The Bahraini government has implemented various reforms to promote entrepreneurship and foreign investment. Setting up a business in Bahrain is relatively straightforward with 100% foreign investment ownership in most business activities, robust ecosystem and business incubators and minimal administration compared to other countries in the region.

Bahrain is centrally located in the GCC, just a stone's throw away from Qatar, and connects to the East of Saudi Arabia by a short 20-minute drive via a single causeway. Bahrain is closer connected to the Northeast of Saudi Arabia than some of Saudi Arabia’s own cities, providing a great connection and easy commuting to the largest market in the GCC.

Bahrain Tax Incentives for Business

We have seen spiking interest from foreign investors in the United Arab Emirates (UAE) for expanding their operations to Bahrain. There are many reasons for this but one being Bahrain’s various tax incentives and exemptions to attract foreign investment.

Much like its GCC neighbours, there is no personal income tax or withholding tax on dividends but unlike other countries in the GCC, there is no corporate income tax.

Since the introduction of 9% corporate tax in the UAE in the last year, businesses are considering their options. Bahrain is now the only country in the GCC still to apply 0% corporate tax rates which makes it even more appealing for new and existing businesses entering the market.

Minimal Bureaucracy in Bahrain

Several business processes in Bahrain strip away the heavy administration requirements and make it easy for businesses to set up in Bahrain and maintain their business.

Maintaining residency in Bahrain

Maintaining Bahrain residency requires minimal effort. There is no minimum stay requirements, no conditions to visit every 6 months (which we often see in other GCC countries residency requirements), and the process to renew a resident permit can be done from abroad. The applicant applying for Bahrain residency will be required in person only when activating the residence permit. This makes it incredibly easy to maintain and manage as an international businessperson.  

Corporate Bank Account Opening in Bahrain

Many businesses setting up across the GCC face issues with opening a corporate bank account. The process can be time-consuming as each bank has different documents and compliance requirements to set up the bank account.

Bahrain is unique in that with company incorporation in Bahrain comes a guaranteed bank account.

There are still processes that need to be followed and steps that need to be taken to choose the bank that best aligns with your business's activities and requirements. The applicant applying for a bank account in Bahrain will be required in person only when signing at the bank to verify the identity of the owner.

The process to open a bank account in Bahrain will include a compliance approval to make sure the individual passes the KYC and Anti Money Laundering checks to ensure banking safety.

The bank account opening process in Bahrain is very streamlined and can be done within just a few weeks (approximately 2-3 weeks). The processes the bank account owner is required for can be incorporated into a single visit to the bank provided they have all the correct information and documentation at the time of the application.

Financial Market and Crypto in Bahrain

With a lot of noise and interest around cryptocurrency, blockchain, and other financial activities across the GCC and the globe, Bahrain is at an advantage for being well-established and practicing in financial activities. Bahrain steered the legal framework and regulations surrounding the digital assets space. Regulations were introduced in 2019 by The Central Bank of Bahrain (CBB).

Companies wanting to operate in virtual assets in Bahrain must obtain a specific license for this activity which follows anti-money laundering regulations.

Bahrain was the first country in the region to launch regulations for digital assets which focused on compliance and consumer protection. The regulations developed by CBB showcase Bahrain’s understanding of the new and high-tech aspects of banking and finance which we can now see being replicated and growing across the rest of the region.

How can we assist in Bahrain?

For a small island, Bahrain has a lot of potential for businesses and entrepreneurs not only in the Finance industry but also in IT, Tourism, Education and Business Consultancy services. There is an increasing demand for industries across all sectors as Bahrain and the GCC see growth. 

If you are interested in Bahrain commercial registry, setting up a business in Bahrain, our Bahrain Business Incubator and Flexi desk offerings or need support with company and family visa requirements in Bahrain please get in touch with us at bahrain@sovereigngroup.com or fill in the in line form and we would be delighted to assist.

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