Bahrain Archives

Article, Bahrain

Step-by-Step Guide to Starting a Business in Bahrain

October 27, 2022

Overview

According to the 2020 Index of Economic Freedom, Bahrain is the fourth freest economy in the Middle East and North Africa (MENA) region and is the 63rd freest economy in the world. Ranked 43rd among 190 economies in the ease of doing business, Bahrain has also been recognized as a High-Income country by the World Bank and the country’s high income can be attributed to oil and natural gas, aluminum export and tourism.

It was in 1970 when the Kingdom of Bahrain started growing into a Financial centre in the Arabian Peninsula and started attracting banks, insurance companies and investment firms from across the globe. Presently Bahrain has more than 114 banks including 23 retail and 69 overseas banks; 2 specialized banks and more than 400 financial institutions and rightfully claimed its position as one of the financial hubs among GCC countries. The central bank of Bahrain (CBB) regulates the banking and insurance sectors and foreign exchange offices.

The regulatory and accounting systems of the financial sector in Bahrain are transparent and comply with the world standard. For decades, the Government has supported the financial sector to reduce its reliance on oil and gas, and use it as the main driver of economic growth. Currently, the financial sector contributes to more than 17% of Bahrain’s GDP.

Besides the financial sector, Bahrain has diversified its economy in other non-oil sectors including manufacturing, real estate. aviation and communications. Alba, one of the largest Aluminum smelters in the world is a living testimony of the government’s commitment to economic diversification, industrialization and privatization.

Benefits of Company Formation in Bahrain

100% foreign ownership is allowed
Free-holding of properties for foreigners
No restrictions on repatriation of capital and profits and no exchange controls
A reliable and efficient communication system
No excessively strict Visa, Residence & Work permit requirement inhibiting foreign investors and expats moving freely in Bahrain
Nil corporate Tax
Abundant cheap energy
Excellent support services from local authorities
The long reputation of political stability, safety and security
Nil personal income tax
World-class infrastructure facilities
Strategic location for cross border trade and investments
Availability of Multiple Entry Visa with five years validity

Investment Climate in Bahrain

The investment climate is generally positive for company formation in Bahrain, a country with a liberal foreign investment outlook and continuously looking for foreign investors and businesses.

The Government of Bahrain, in its endeavour to attract foreign direct investments, offers a lot of incentives to foreign investors for doing business in Bahrain. Many attractive incentives are offered from various Bahrain based institutions namely the Bahrain Logistics Zone (BLZ), Bahrain Development Bank (BDB), Bahrain Economic Development Board (EDB), Bahrain International Investment Park (BIIP), and Tamkeen, the semi-autonomous government agency of Bahrain.

A few of the incentives offered are

Assistance in company registration in Bahrain and starting business operations
Financial Grant
Duty-free access to other GCC countries for products manufactured in Bahrain
Exemptions of import duties on plant and machinery

Promoting Investment and Trade: Free Trade Zones (FTZ) and Free Port

Entire Bahrain itself can be termed as a large Free-Zone as it is tax-exempt, doesn’t impose any restrictions on foreign ownership for most of the businesses and levies minimum customs duties.

Americans and GCC nationals are officially treated as Bahrainis and there is no restriction on 100% foreign ownership for any businesses and industries at all.

Bahrain has three main FTZs including Bahrain Logistics Zones (BLZ), Bahrain International Investment Park (BIIP) and Bahrain International Airport (BIP) and offers no annual rental, 50% lower utility cost and nil customs duty. Foreign-owned companies enjoy similar benefits for doing business in Bahrain and have access to the same investment opportunities as Bahraini companies.

Bahrain’s primary commercial seaport, Khalifa Bin Salman Port provides a free transit zone to facilitate duty-free import of equipment and machinery into the country.

Expatriates are permitted to own land in designated areas in Bahrain. Americans and non-GCC nationals can also own commercial and residential properties including properties used for tourism, banking and finance, health projects, and training centres.

To strengthen its position as a startup hub and to promote the investment ecosystem through new company formation in Bahrain, the Government introduced in 2018 the Bahrain FinTech Bay, the largest FinTech hub in the MENA region. Four new laws were also enacted on data protection, bankruptcy, competition and health insurance.

Bahrain also launched the USD100 million Al Waha venture capital fund for Bahraini investments and set up a USD100 million ‘Superfund’ as a growth initiative of start-ups.

Types of Companies in Bahrain

The Bahrain Commercial Companies Law (BCCL) enacted in 1971 and subsequently amended in 2001, defines and regulates the companies in Bahrain.

Following BCCL requirements, Bahrain companies are classified as under

1. Joint Stock Company (JSC)

This is one of the popular corporate vehicles in Bahrain and consists of two or more partners as shareholders. The partners are not liable for the company’s debt and obligations except the amount equaling the value of their shares.
These are two types including

Public Joint Stock Company

The minimum paid-up capital is BHD 1 million with one mandatory auditor.

Closed Joint Stock Company

The minimum paid-up capital is BHD 250,000 with each share not exceeding 100. One auditor is mandatory with 100% foreign ownership.

2. Limited Liability Company (LLC)

Also known as the With Limited Liability Company ( WLL) is a popular business structure for foreign investors and offers 100% foreign ownership for most businesses. There can be a maximum of 50 partners responsible for the debt and obligations of the company. One mandatory auditor with an office in Bahrain. Must have two directors and two partners as a minimum. The minimum share capital requirement is BHD 100,000

3. Single Person Company (SPC)

It is also a preferred company vehicle in Bahrain and is owned by one single member owning the entire business and unlimited liability for company debts and obligations. The minimum paid-up capital is BHD 50,000. Must have one Director and one partner with an office in Bahrain.

4. Limited Partnership Company (LPC)

This is also a major company type with a partnership between two members or two corporate bodies personally liable for the debts and obligations of the company. There should be two partners and a minimum of two Directors. Must have a local office in Bahrain. There are subcategories of partnership companies such as Simple Limited Partnership Company, Limited Partnership by share.

Decree 28 of 2020, has been issued on 28th September 2020 documenting various amendments to certain provisions of BCCL, Law 21of 2001 as a part of Bahrain’s ongoing commitment to developing its ‘compliance and regulatory frameworks ‘ at par with international best practice. The regulations have not been issued yet and likely to be enforced in the coming months.
Few highlights of Proposed amendments are

A merger of SPC with WLL
For WLL companies, no restriction on maximum shareholders
Not-for-Profit companies, a new chapter added to BCCL & may be set up as the WLL
For WLL, the minimum share capital requirement has been removed
JSC can increase capital by converting debt to equity
LPC not permitted to adopt a trading name

New Company Registration in Bahrain

The Bahrain Ministry of Industry Commerce and Tourism (MoICT) has launched an online commercial registration portal known as “Sijilat” to facilitate the commercial registration process.

Through Sijilat, businesses can obtain a license and other requisite approvals from the relevant authorities. The business registration process usually takes two to three weeks however can take longer if a business requires specialized approvals.

Normally most businesses outsource consultancy services for company registration in Bahrain to assist them through the commercial registration process.

Besides obtaining primary approval to register a company, most business owners must also obtain licenses from the following entities to operate their businesses:

The government also provides industrial lands at reduced rental rates for short periods as an incentive towards foreign investment through new company formation in Bahrain.

MoICT
The Municipality in which their business will be located
The National Bureau for Revenue, Compulsory if the business revenue expected to exceed BD 37,500
Ministry of Electricity and Water
Labour Market Regulatory Authority
General Organization for Social Insurance

Pre-incorporation Steps for company registration in Bahrain

Selecting your business type and activities
Deciding on the Share Capital
Selection of Outsourced services for Company Registration in Bahrain
Choosing a Company Name
Determining the Shareholding Pattern
Assigning Shareholders Designations

Process Steps for company registration in Bahrain

Submitting Application to MoICT with details of applicant and company name, type of business, the total number of shareholders, total share capital, shareholding patterns, passport copies, visa status etc.
Commercial Registration (CR) is issued without a license once the application is reviewed and approved by MoICT
Obtaining the requisite business Licenses based on your business activity
Articles of Association (AOA) and Memorandum of Association (MOA) are to be documented and submitted for approval. Once accepted, MOA & AOA are to be notarized and the copies to be submitted online
Obtaining Bank Deposit Certificate from the bank and submitting online to MoICT

Documents for Company Registration in Bahrain

The main documents required for company registration in Bahrain are

Duly filled company registration application form
Capital Deposit Certificate
Copies of Passport and Visa for company shareholders
Power of Attorney for Outsourced Consultant
Company Business Plan
Commercial office address details
Copies of Certificates of education and training of the applicant
MOA and AOA

Tax Considerations in Bahrain

Bahraini companies are completely free of taxation except for companies in oil, gas, oil exploration, mining and refining sectors taxed at 46%.

Value-added tax (VAT) is imposed on goods and services at a uniform rate of 5%. Financial and insurance services and real estate business are VAT exempt. No VAT is levied on food items and education. Oil and gas exploration is also free of VAT.

Foreign Commercial and residential properties attract 10% Municipal Tax and 2% stamp duty is levied on sales and registration of real estate properties.

The import duty of 5% levied on imported goods. Alcohol and cigarettes attract 125% and 100% duty. All imported goods in Bahrain need customs clearance from the Director-General of Customs.

Bahrain is free of withholding tax, capital gains tax and payroll tax.

All companies are required to submit audited financial statements within 6 months of financial year-end and file quarterly tax returns. Non- compliance attracts 1% monthly fines.

Bahrain has a Double Taxation Avoidance Agreement (DTAA) with more than 40 countries motivating foreign entrepreneurs for company formation in Bahrain.

Takeaway

Like all other countries in the world, the recent Covid-19 pandemic and fall in global oil prices made it difficult for Bahrain to generate revenue and reduce government spending. In April 2020, Bahrain announced a BDH 4.3 billion (USD11.4 billion and equivalent to 29% of the country’s GDP), eight-point stimulus package to support the economic slowdown caused by the Covid-19 restrictions. Several subsidies have also been introduced to foreign-owned and local companies including utility bills coverage and waiver of tourism and industrial land fees to ease doing business in Bahrain.

Though Bahrain’s investor-friendly, liberal and tax-free business scenario is becoming increasingly attractive to foreign investors, setting up a new business establishment is very competitive, arduous and time-consuming. Outsourcing of a business service agency is hugely beneficial to facilitate and support the company registration in Bahrain and here comes IMC as your perfect business partner.

IMC has a long presence in GCC countries as a Business Process Services (BPS) provider and has acquired a total understanding and knowledge of the functioning of Bahraini government bodies.

A customer-centric affordable services company supported by a team of enthusiastic result-oriented professionals, IMC can cater to all your needs for doing business in Bahrain.

Pre-Incorporation Advice

IMC has the experience and expertise to advice customers on the suitable company type taking in to account the laws of the land and the unique customer’s needs. We have the experience having handled different industries and geographies across the world. We understand finance and the legal framework required to handle a company’s operations. We will advise on the percentage of shareholding allowed for foreigners, and the rights which go with that percentage and other such business matters. IMC has been operating in GCC for over 10 years.

Types Of Companies

With Limited Liability Company (W.L.L.)
Partnership Company
Bahrain Shareholding Company (B.S.C.) – public
Bahrain Shareholding Company (B.S.C.) – closed
Simple Commandite Company
Commandite by Shares
Single Person Company
Branch of a Foreign Company
Holding Company

Documents Required For Company Formation

Company Registration application form
Draft Memorandum of Association
Board of Directors resolution resolving to establish the company in Bahrain (for corporate partners)
National ID card (Central Population Registry (CPR)) copies of the company’s representatives. If the partners are not present themselves to register the company, copies of the ID cards of their lawyers/other representatives must be provided
CVs of individual partners
Lease agreement as proof of the company’s commercial address

Free Zones in Bahrain

The island nation of Bahrain is diversifying its economy away from unsustainable hydrocarbons resources to sectors such as banking and finance, trade and industry, retail and tourism. Its physical link to Saudi Arabia – via the King Fahd Causeway, constructed in 1986 – has facilitated trade, tourism and retail.In 2013, Bahrain was ranked as the 12th most- free economy in the world by the US’ Heritage Foundation think tank. Bahrain is home to THREESpecial Economic Zones, all of which were ranked in the top 20 locations for inward investment, economic development and business expansion in FDI Magazine’s Global Free Zones of the Future 2012/13 report.

Advantages

FZ companies do not require a Bahrain national shareholder for trading and commercial activities. While it is mandatory to rent a free zone office at a low rent, it is not necessary to hire staff
Land rental rebates of 100% in government industrial areas for the first three years
Electricity rebates of 50% for the first five years of operation
No duties are imposed on goods imported and exported from the Free Zone

Bahrain International Airport (BIA)

Bahrain International airport sits in 19th place in the free zones of the future list, and is ranked fifth-best airport zone in the world. Offering cargo facilities, offices and retail space, the foreign trade zone has no customs duties. It is governed by Mumtalakat, the government vehicle for Bahrain’s non-oil and gas investments, established in June 2006 by royal decree.100% foreign ownership is allowed and it has a “bonded cargo terminal” allowing for delayed payment of duties until products leave the facility.

Bahrain Logistics Zone (BLZ)

The Bahrain Logistics Zone was established in 2008 next to Khalifa bin Salman port, the island’s main harbour. Placed 16th in the FDI Magazine ranking, the port zone offers land plots of 3,000 square metres and more for lease. The 100- hectare zone focuses on third-party logistics, storage and distribution (for export and re- export), as well as other logistics services and activities. In the first quarter of 2013, container throughput stood at 95,828 20-foot equivalent units, with an average processing time of 32 minutes.The BLZ is ideal for regarding-exporting and logistics companies benefiting from zero-tax and duty exemptions. It is also a boutique center for manufacturers in component assembly, packaging, testing, and repair companies.

Bahrain International Investment Park (BIIP)

BIIP offers100 per cent foreign ownership of companies, duty-free access to GCC markets, exemption from import duties on both raw materials and equipment and 100 per cent repatriation of capital. Located 5 kilometers from Bahrain International airport, BIIP consists of 2.5 million sq m of leasable land, costing $1.33 a sq m a year to rent. GCC free zones are considered as being outside the country, so goods are taxed at 5 per cent when exported to Bahrain. BIIP is not treated as a free zone, so is not subject to the 5 per cent tax when shipping goods to Bahrain.The Bahrain International Investment Park is ideal for large manufacturing operations, including food process, medical technology, electronics, and materials. Export led services including insurance claims, administration, and software and information systems.

Access to Bahrain double tax treatiesYes

Type	Limited Liability Company (WLL)
Under Bahrain law, foreigners can own	100%
Share Capital	US$ 133,000
Director	Minimum Two
Memorandum & Articles of Association	Yes
Shareholders	Minimum two
Can the entity hire expatriate staff in Bahrain	Yes
Bahrain Resident Secretary Required	Yes
Statutory Audit Required	Yes
How long to open Corporate Bank Account	One Day
Annual Tax	Must be filed
Timeframe for Incorporation	1 month

Bahrain, Newsletter

Bahrain Focuses on Five Economic Growth Strategies to Achieve Fiscal Balance By 2024

January 10, 2022

On Sunday, 31st October 2021, Bahrain released details of new economic growth and fiscal balance plan that delays the zero deficit target by two years to 2024 from 2022 and increases the Value added tax to 10% from 5%. The plan aims at supporting post covid economic recovery and promoting the country’s long term business competitiveness.

“This comprehensive economic and fiscal plan is an investment in our nation’s people, our businesses, and the future of Bahrain,” highlighted the Minister of Finance and National Economy Shaikh Salman bin Khalifa Al Khalifa.

The newly announced economic growth plan is in alignment with Bahrain’s Economic Vision 2030 and the country’s aim to achieve net-zero by 2060 and focuses on five main strategies as under.

Implementing a Regulatory Reform Package that would help attract USD 2.5 billion of Foreign Direct Investment by 2023 and includes simplification of licensing procedures and approvals for doing business in Bahrain; launching of a new Government Land Bank; displaying investment opportunities on an online portal; simplifying urban planning related services through digitisation; initiating a new residency permit program for attracting investors and talents into the Kingdom.

Rolling out a new labour market reform plan for generating 20,000 jobs for locals and training 10,000 Bahraini citizens till 2024. The new plan will focus on a long term national labour market strategy, a new ‘Tamkeen Strategy’ for promoting private sectors, reviewing labour fees and continual upskilling of the country’s workforce.

Introducing a Priority Sectors Plan for implementing six new sector strategies in oil and gas; logistics, tourism, financial services; telecommunications, IT and digital economy; and the manufacturing sector and ensuring annual growth rate of 5% in the non-oil sector by 2022.

Implementing a strategic projects plan for creating new industrial investment locations across the country and mobilizing more than USD 30 billion investments in strategic projects.

Updating the Fiscal Balance Program by incorporating eight new fiscal reform workstreams including reduction of recurrent non-manpower expenditure; reduction of project spending; reduction of manpower expenditure; streamlining of distribution of cash subsidies to citizens; increased annual contributions of Government-owned entities; adjustment of commodities prices as well as prices of services provided to companies; introduction of new initiatives for Government services revenue; and increase in VAT to 10%. The updated program aims to balance the national budget by 2024 against the pre-COVID 19 targets of 2022.

The Minister of Finance and National Economy also emphasized saying “The plan is also a concrete statement of our intent to secure a balanced budget by 2024 and provide long-term fiscal sustainability, with eight new spending and revenue initiatives complementing our broader economic competitiveness enhancements.”

In recent years, Bahrain’s government has launched several initiatives and programs that have significantly contributed to ongoing economic development and promotion of foreign investment into the Kingdom’s economy through new company formation in Bahrain in non-oil sectors.

Article, Bahrain

8 Reasons Why Companies in Bahrain Should Outsource Company Secretarial Services

January 10, 2022

Introduction

As Bahrain puts great strides to diversify and develop its non-oil economy, the government is actively pursuing various amendments to certain provisions of the Bahrain Commercial Companies Law (BCCL) as part of the country’s ongoing efforts to develop its compliance and regulatory frameworks in line with international best practices.

In the light of recent economic developments and changing business landscape in the world, the stakeholders of companies are getting overly concerned with the conduct of affairs of their companies and looking for increased control and monitoring of regulatory compliance. As Bahrain is laying out more regulatory requirements at the feet of company secretaries, their functions are becoming extremely vital for the long-term growth and sustainability of business organisations.

With the increased focus on corporate governance by the Ministry of Industry and Commerce (MOIC) Bahrain, the role of the company secretary has been expanded to include its function as the custodian of the company’s compliance with legislative requirements for avoiding legal procedures.

As soon as a new company formation in Bahrain is initiated, the government recommends the implementation of professional company secretary services in advance for streamlining bookkeeping and accounting processes for appropriate record-keeping and timely compliance of regulatory protocols.

What is the role of a company secretary?

The company secretary is responsible for ensuring compliance with company law, maintaining certain statutory registers and making the necessary filings with the Registrar of Companies including annual returns, financial statements and any changes in share capital.

In reality, the role of the company secretaries has gone much beyond the basic statutory requirements and the added responsibility of improving corporate governance through system and process development has now fallen on their lap. The chairperson and the board directors are also constantly looking up to them for skills, expertise and technology in this area. Periodic reviews of corporate governance policies with recommendations for improvements is also their responsibility.

Another critical role that the company secretary has is communicating with external stakeholders. They are also the first point of contact for investor queries.

Why outsourcing of company secretarial services is beneficial for companies?

In Bahrain, the company secretary function is one of the most vital elements in business and mandatory to address the regulatory requirements in the company’s legal, financial and corporate governance perspective.

Collaborating with professional experts facilitates achieving the ultimate organisational objective of business sustenance and growth with continued regulatory compliance on all business fronts. Following are the benefits of outsourcing company secretary services in Bahrain.

Cost Advantage

As foreign investment grows with a greater number of business establishments in Bahrain, so does the demand for skilled and professional company Secretaries. Hiring employees for company secretary functions is not only difficult but expensive too and generally involves lots of training and skill development programs that push the employee cost even higher. Besides, there are recruitment and employee retention costs as well and again increases the fixed employee overheads. Furthermore, a doubt always remains about the quality of service that the employees will deliver.

Outsourcing Company secretary services, on the other hand, is a one-time cost and saves time and other resources of setting up an in-house facility. Professional service charges of company secretary service providers are much less than the employment and maintenance cost of the internal Corporate Secretarial Team and translate to considerable cost savings.

Savings in Time and Efforts

When a company secretarial service is outsourced, it generally cuts back huge time and efforts on recruitment, employee engagement, training and development. The time saved can be utilised more productively in other business pursuits including strategic planning, operating cost optimization etc. The responsibility of training and development of internal staff generally lies with the service provider.

Improved Investor Confidence

The external service providers ensure the most accurate and reliable financial statements of the company that improves clarity and confidence about the financial future of the business and in turn, facilitate investment decisions of potential investors. As corporate governance improves, the board takes smart and strategic decisions for value unlocking and attracts more investments.

Wide Range of Services

Company secretarial service providers generally offer packaged services with several options that can be selectively chosen by the companies as per their needs. Accounting services in Bahrain are often the most lucrative options and can help companies grow in several ways.

Earlier Access to Legal Updates

Company secretarial service providers because of their profession keep a closer track of all business and company-related legal updates and provide businesses with early information on any inclusion and amendment in government regulations.

Improved Goodwill

Company secretarial services focus on improving the corporate governance of the company. Once implemented with the right spirit with the help of expert professional service providers, the company’s goodwill in the market is significantly boosted opening avenues for future business growth.

Access to advanced technologies

Company Secretarial service providers generally use the latest technology and software to accomplish their job. Once a company hires such service providers, it can benefit from the latest and updated high tech software available with the agency without incurring costs on procurement, installation and maintenance.

Risk Mitigation

Risk mitigation is the essence of company secretarial services outsourcing and primarily because these agencies have a team of expert and seasoned professionals who can identify anomalies and non-compliance in the system and processes at the earliest and can take quick corrective and preventive actions for avoiding legal actions and penalties. They are committed to their planned schedules and normally have high standards of reliability. Some of them are industry veterans and work with clients from diverse fields and enjoy better PR with government agencies and officials. They are more receptive to any impounding threats and can take prompt and most appropriate countermeasures.

Takeaway

Before outsourcing company secretarial services in Bahrain, you need to find out one of the best corporate secretarial services providers primarily operating in your field of business and one with a high reputation and success rate. The service provider needs to be affordable and must have team members with high levels of professional qualifications. You also need to choose a firm that has a base in Bahrain and possess good knowledge and information on local laws.

Bahrain, Newsletter, U.A.E

The UAE and Bahrain Exchanges Several MOUs for Bilateral Cooperation and Mutual Economic Development

December 12, 2021

The recently agreed MOUs reached between the UAE and Bahrain are intended to promote bilateral cooperation between the two countries in many important areas and pave the way for the effective realization of economic growth plans of both countries. A new executive programme has also been launched encompassing some key areas including investment and trade, higher education, teacher training and human resources.

The MOUs were signed during the official visit of His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister of Bahrain to UAE in November 2021. Prince Salman met His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, during his visit.

HRH Prince Salman and HH Sheikh Mohammed were present during the signing of several agreements and MoUs including the new executive programme that spans over several areas such as climate change, higher education, teacher training, human resources, trade and investment, advanced technology, economic integration, food security, health care, artificial intelligence in oil and gas, transportation, technical support for upstream industries, cyber security, cyberspace technical cooperation, logistics, combating crime, and stock markets.

At the end of the visit, a joint statement was issued by the governments of the UAE and Bahrain wherein the two countries agreed to promote bilateral cooperation in key areas to attain mutual benefits and joint objectives of both countries. Each country agreed to encourage ministries and government authorities to cooperate and transform cooperation objectives into joint ventures.

Both the countries committed to addressing the pandemic and exchanging best practices and reinforcing scientific cooperation in medical research. Abdul Rahman bin Mohammed bin Nasser Al Owais, UAE Minister of Health and Prevention, and Faeqa bint Saeed AlSaleh, Bahraini Minister of Health, exchanged an MoU on health cooperation.

The two countries also committed to cooperating in employment, labour and localisation and exchange expertise and best practices in these areas. An MoU on labour and HRD was signed between Dr Abdulrahman Al Awar, UAE Minister of Human Resources and Emiratisation, and Jameel bin Mohammed Ali Humaidan, Bahraini Minister of Labour and Social Development.

An MOU on Cybersecurity Cooperation was exchanged between Mohamed Hamad Ak Kuwaiti, the Head of Cybersecurity of the UAE government and Sheikh Salman bin Mohammed Al Khalifa, CEO of National Cybersecurity Strategy of Bahrain.

The two countries agreed to work jointly to address the burning issue of climate change and an MoU on climate change and environmental cooperation were exchanged by Dr Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and UAE Special Envoy for Climate Change, and Dr Mohammed Mubarak bin Dainah, Chief Executive Officer of the Supreme Council for Environment of Bahrain.

Technological advancement was also on the agenda of two countries and an MoU on industry and advanced technology was exchanged between Dr Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, and Zayed bin Rashid AlZayani, Bahraini Minister of Industry, Commerce and Tourism.

Two MoUs, one each on higher education and executive programme for cooperation in education for three years; 2021, 2022 and 2023 were exchanged between Sarah bint Yousif Al Amiri, UAE Minister of State for Advanced Technology, and Abdullatif bin Rashid Al Zayani, Minister of Foreign Affairs of Bahrain.

The two countries agreed on cooperation in trade and investment and an MoU was signed between Abdullah bin Touq Al Marri, UAE Minister of Economy and Zayed bin Rashid AlZayani, Bahraini Minister of Industry, Commerce and Tourism. Advancing the tourism industry was also the focus of both countries.

To recognize UAE as a partner in Bahrain Global Sea-Air Logistics Hub, an MoU was exchanged between Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, and Zayed bin Rashid AlZayani, Bahraini Minister of Industry, Commerce and Tourism to restore the aviation sector to the pre-pandemic level.

An MoU was reached between Abu Dhabi National Oil Company (ADNOC) and Gas Holding Company of Bahrain. Dr Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC, and Dr Mohammed Mubarak bin Dinah, Chief Executive Officer of the Supreme Council for Environment of Bahrain, also exchanged an MoU between Adnoc and Tatweer Petroleum.

UAE Minister of Energy and Infrastructure, Suhail bin Mohammed Al Mazrouei, and Kamal bin Ahmed Mohammed, Bahraini Minister of Transportation and Telecommunications, signed an MoU on transportation and communications.

An MoU was signed between Abu Dhabi Securities Exchange (ADX) and Bahrain Bourse and was represented by Saeed Hamad Al Dhaheri, ADX CEO, and Khalifa Ibrahim Al Khalifa, CEO of Bahrain Bourse.

Export promotion has already been an area of cooperation between the two countries as Export Bahrain and Dubai Industries and Exports signed an agreement in October 2021 to support Bahraini investors exploring the UAE market and Dubai company incorporation.

It was agreed that relevant national organisations from both countries will reinforce their economic ties. A centre will be established for UAE nationals looking for a company formation in Bahrain that would connect commercial registries in the two countries.

The Crown Princes of both the countries expressed their common and sincere desire to support bilateral relations moving forward for mutual development and progress of the two countries and contribute to building a prosperous future for their citizens.

Bahrain, Newsletter

What Could be the Potential Business Impacts of the VAT Rate Hike in Bahrain from 2022?

November 24, 2021

Bahrain, the smallest amongst the six GCC countries including Saudi Arabia, UAE, Oman, Qatar and Kuwait has announced during the last week of September 2021 to increase the VAT rate to 10% from the prevailing rate of 5% effective from 1st January 2022.

Sheikh Salman bin Khalifa Al Khalifa, the Finance and Economy Minister said in an official briefing “The Kingdom is emerging from the pandemic with reasons to be highly optimistic and the plan announced today aims to turbocharge the recovery.”

The Council of Ministers in Bahrain has approved the VAT rate hike to re-stabilise the Fiscal Balance Programme initiated during the end of 2018 however severely impacted by Covid 19.

VAT is a consumption tax and ultimately, the consumers bear the cost increase due to VAT rate hike. It is largely believed that the zero-rate would continue on essential supplies including basic food, healthcare, education, the oil and gas sector, the construction of new buildings, local and international transport. Metals and reality sectors are also expected to be out of this new tax structure and certain financial services might also enjoy an exemption.

What needs to be addressed by the Businesses in Bahrain?

Like every tax rate increase, the VAT rate hike shall also have implications on businesses who should first assess the impacts of the tax raise from their operational perspective considering both internal processes & systems and then critically review the legal requirements about charging of VAT and reporting the right amount of tax due to the National Bureau of Revenue (NBR), Bahrain.

As the recent pandemic has posed serious cash flow challenges to all businesses the world over making it difficult to get going, the businesses in Bahrain need to have sound and strategic plans in place to optimize the working capital cycles. Due to the difference in timing between the payment and recovery of VAT, the rate hike will have an impact on cash flow.

Concrete planning must also be in place for the smooth transition to the higher tax regime approximately in a month. Simply changing the VAT rate from 5% to 10% in their ERP systems would not suffice and all transitional provisions must be assessed with utmost care for every individual contract. It needs to be ascertained if contracts with customers and suppliers extend beyond 1st January 2022 and if any special VAT rules and regulations apply to them.

What needs to be the focus areas for Bahrain businesses?

Businesses need to focus upon a number of crucial areas including

Getting ready for Increased Audit frequency from NBR as the rate hike becomes the most crucial source of revenue for the government
Being aware of Increased compliance requirements as two-time penalties may be imposed on the tax due amount because of the higher tax rate
Correct understanding of transitional rules, especially for businesses involved in continuous and periodic supplies of goods and services and upgrading of IT Systems with automation
Strategic planning Cash flow in terms of VAT being due before payment is received from creditors. The cash flow impact may be higher for businesses in a constant refund position such as certain exporters.
Identifying needs to modify terms and conditions of existing contracts with suppliers and customers.

How can IMC help?

IMC is a cross border corporate service provider with a local presence in Bahrain and comes with extensive experience in VAT implementation and compliance systems. We successfully handled a smooth transition to a higher VAT regime in different businesses sectors in the UAE and Saudi Arabia.

We have a team of experts with proven experience in VAT-related challenges and how to mitigate them.

We are keenly monitoring all developments in this regard and looking for additional information on the rate increase and transitional rules.

As the time is limited, we strongly suggest that taxpayers must immediately start a 360-degree analysis on the potential impacts of the increased VAT rate on their operations, supply chain, invoices and contracts, cash flow, internal audit schedule and IT infrastructure.

Bahrain, Kuwait, Newsletter, U.A.E

Middle East – Historic OECD/G20 Inclusive Framework Agreement on BEPS 2.0

July 11, 2021

In a historic and broad-based consensus on the needed reforms for the international tax system to address the digitalisation of the global economy, the Organisation for Economic Co-operation and Development (OECD) / G20 through the Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) set out a Statement on the two pillar solution for global tax challenges that was approved by 130 of the member jurisdictions and countries as of 5th July 2021.

The agreement was reached after carrying out lots of technical work and holding a series of discussions by the 139 member countries of the Inclusive Framework. A ” two-pillar” approach developed jointly, proposes the allocation of profit to countries in which a multinational entity (MNE) engages itself in selling activities to derive value and imposition of a global minimum rate of tax.

Pillar One is a significant shift from the century-old international tax system where only an entity with a physical presence in a country can only be taxed.

There are many countries announcing consensus with the proposals and include China, India, Switzerland, Singapore, the United Arab Emirates (UAE), Bermuda, Jersey, Guernsey and the Isle of Man. Inclusive Framework (IF) member countries that have not yet approved the proposals are European Union (EU), Ireland and Hungary.

Countries that do not currently levy corporate income tax or have effective tax rates below the proposed global minimum tax rate of 15% such as the UAE and Bahrain, will be subject to some key decisions.

The draft ‘Blueprints’ of the technical aspects of the proposals under these two pillars were issued by OECD on 12th October 2020. However, discussions on the design of measures continued and got refined over time by some concerned jurisdictions and included regulations for addressing profit allocation issues, Pillar One and the global minimum tax rate, Pillar Two.

Afterwards, the Biden Administration in the USA simplified the proposals in April 2021 and updated them to facilitate the political agreement reached by the G7 countries in June 2021.

October 2021 has been set as a target to finalize the detailed implementation plan including resolution of any pending issue.

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting based on a two-pillar solution has some key components for each Pillar as outlined below.

PILLAR ONE

Pillar One has been designed to reallocate profits for large companies to market countries.

‘Amount A’ of Pillar One would provide a new right of taxation to market jurisdictions on residual profit. The statement stipulates important developments regarding the scope and computation of Amount A. The statement states that Amount B is meant for streamlining the application of the arm’s length standard to routine marketing and distribution activities, but does not substantiate Amount B.

Scope

Multinational enterprises (MNEs) with global turnover exceeding 20 billion euros and profitability of more than 10% measured as ‘profits before tax divided by revenue’, come under the purview of Pillar One. This turnover limit would be reduced to 10 billion euros 7 years after Pillar One comes into force contingent on successful implementation.

Extractives and Regulated Financial Services are not included in Pillar One.

New Taxing Right Calculation

The statement sets forth a new special-purpose nexus rule allowing allocation of Amount A to a market jurisdiction when the qualifying or in-scope MNE derives a minimum of 1 million euros in revenue from that jurisdiction. For Jurisdictions with a GDP of fewer than 40 billion euros, the nexus will be set at 250 000 euros.

The special-purpose nexus rule applies solely for assessing if a jurisdiction qualifies for the Amount A allocation.

The statement specifies that for qualifying businesses, 20 to 30% of their residual profits, more than 10% profit level needs to be reallocated to market countries using an allocation key based on revenue.

Revenue Sourcing

Revenue sourcing will be done to the end market jurisdictions where goods or services are consumed. Detailed sourcing rules will be developed for specific categories of transactions to facilitate the underlying principle. In applying the sourcing rules, an MNE must use a reliable method depending on specific facts and circumstances of the business.

Determining Tax Base

Profit or loss of the in-scope businesses will be based on financial accounting income, as relevant with minimum adjustments and carry forward of losses will be done.

Segmentation

The statement specifies that segmentation would only be needed in exceptional cases in which, depending on the segments figured in financial accounts, a segment would meet the scope limit.

Marketing and Distribution Profits Safe Harbour

Where the residual profits of an in-scope business are already taxed in a market jurisdiction, a marketing and distribution profits safe harbour will limit the residual profits allocated to the market jurisdiction through Amount A. For outlining a more comprehensive scope, future work will be undertaken on designing a safe harbour.

Elimination of Double Taxation

Reliefs on double taxation of profit allocated to market jurisdictions will be either through exemption or credit method.

The entities that will be subjected to taxation would be compensated from those that earn residual profit.

Tax Certainty

The statement provides a commitment that MNEs will benefit from dispute prevention and resolution mechanisms including avoidance of double taxation for Amount A and all issues related to Amount A such as transfer pricing and business profits disputes in mandatory binding dispute prevention and resolution mechanism. Disputes on whether issues may relate to Amount A will be resolved in a mandatory and binding manner.

The statement says that consideration will be given for an elective binding dispute resolution mechanism for issues related to Amount A for certain developing countries with few and no mutual agreement procedures and who are eligible for deferral of their BEPS Action 14 peer review.

The statement commits simplification and streamlining of ‘Amount B’ for application of the arm’s length principle to in-country baseline marketing and distribution activities particularly focused on the needs of low capacity countries and completion by the end of 2022.

Administration

The statement provides a commitment to streamlining tax compliance and filing by allowing MNEs to manage the process through a single entity.

Digital Service Tax (DST) Removal

The statement assures appropriate and unilateral measures on the application of newly introduced international tax rules and the removal of all Digital Service Taxes and other relevant similar measures on all companies.

Implementation

The statement offers that ‘Amount A’ will be implemented through a multilateral instrument which will be developed and made available for signature in 2022 and the ‘Amount A’ will come into force during 2023.

PILLAR TWO

Pillar Two deals with the Global Minimum Tax rate and will ensure that in-scope businesses pay a minimum effective tax rate of at least 15% on profits in all jurisdictions.

Overall design

The statement describes Pillar Two as consisting of two interlocking domestic rules, Income Inclusion Rules (IIR) and Undertaxed Payment Rule (UTPR) together called the Global anti-Base Erosion Rules or GloBE rules and the Subject to Tax Rules (STTR).

Income Inclusion Rule (IIR), will impose a top-up tax being payable by a parent entity to the tax authorities in respect of the low taxed income of a constituent entity.

Undertaxed Payment Rule (UTPR) will be applied as a secondary rule that denies deductions or requires an equivalent adjustment to the extent the low tax income of a constituent entity is not subject to tax under an IIR.

The Subject to Tax Rule (STTR)), a treaty-based rule incorporated in bilateral treaties by countries will allow source countries to enact limited source taxation on certain related payments including interest, royalties and other payments to the parties subject to tax below a minimum rate. The STTR will be creditable as a covered tax under the GloBE rules.

Status of Rules

The statement specifies the GloBE rules as a ‘ common approach’ implying that IF member countries are not needed to adopt the GloBE rules however must accept their application by other IF members. If the member countries that adopt the application of the GloBE rules would agree to implement and administer the rules consistent with the agreement reached on Pillar Two.

Scope

The statement notes that GloBE rules will apply to MNEs with revenues exceeding 750 million euros and as determined under BEPS Action 13 country by country (CBC) reporting. The statement notes that countries can freely apply the IIR to MNEs headquartered in their country even if they are not in scope.

Exclusions are noted as GloBE rules will not apply to Government entities, international organisations, non-profit organisations, pension funds or investment funds that are Ultimate Parent Entities (UPE) of an MNE Group or any holding vehicles used by such entities, organisations or funds.

Design of Rules

The statement provides that the IIR allocates top-up tax based on a top-down approach wherein the application of IIR by the country at or near the top of the ownership chain of the MNE group is prioritized subject to a split-ownership rule for shareholdings below 80%.

The statement also notes that UTPR allocates top-up tax from low-tax constituent entities including those located in the UPE jurisdiction under a methodology to be agreed upon.

Calculation of Effective Tax Rate (ETR)

The GloBE rules specify imposition of top-up tax by utilizing an effective tax rate test that will be calculated based on jurisdictions and using a common definition of covered taxes including the tax base determined by reference to financial accounting income with small and agreed on adjustments consistent with the tax policy objectives of Pillar Two and mechanisms to address timing differences.

Regarding the existing distribution tax systems, there will be no top-up tax liability if earnings are distributed within 3 to 4 years and taxed at or above the minimum level.

Minimum Rate

The statement notes that the minimum tax rate to be used for the IIR and UTPR will be at least 15%.

Carve-outs

The statement notes that GloBE rules will provide a formula based substance carve-out that will exclude an amount of income that is at least 5% and a minimum of 7. % during the transition period of 5 years of the carrying value of tangible assets and payroll.

The statement commits to a de minimis exclusion In the GloBE rules.

Additional Exclusions

International shipping income using the definition of such income under the OECD Model Tax Convention also finds an exclusion in the GloBE rules

Simplifications

To avoid compliance and administrative costs that are disproportionate to the policy objectives, the implementation framework will include safe harbours and/or other mechanisms to facilitate the administration of GloBE rules for the targeted jurisdictions.

Global Intangible Low Taxed Income (GILTI)

The statement notes that to ensure a level playing field the Pillar Two will apply a minimum rate on a jurisdictional with consideration given to the conditions under which the US GILTI regime would coexist with the GloBE rules.

STTR and Bilateral Treaties

The statement highlights that IF members recognise STTR as an integral part of achieving a consensus on Pillar Two for developing countries. IF members that apply nominal corporate income tax rates below the STTR minimum rate to interest, royalties and a defined set of other payments if requested will incorporate the STTR during bilateral treaties with developing IF members.

The statement provides that the difference between the minimum rate and the tax rate on the payment would limit taxing right and the STTR minimum rate will vary from 7.5% to 9%.

Implementation

The statement notes that on reaching an agreement the IF members will release an implementation plan contemplating that Pillar Two should be brought into law in 2022 and to be made effective during 2023.

The implementation plan will include:

GloBE Model rules with proper mechanisms for facilitating GloBE rules coordination
An STTR model provision for facilitating the adoption
Transitional rules with a provision for a deferred implementation of the UTPR

Clarifications Requirements

Though the statement clarifies many issues and technical aspects, some key political and technical aspects remain unanswered including

The definitive minimum rate to be applied
ETR calculation mechanism
Designing of the “de minimis exclusion” carve-out
Designing of exclusion for MNEs during the initial phase of their international activity
UTPR designing
The scope of the simplification plan
STTR minimum rate

Future Steps

The IF agreement on BEPS 2.0 highlights the hopes and desires of the member countries for a global minimum tax rate with limited impacts on MNEs performing real economic activities with substance. The two-pillar proposals will be again discussed amongst the G20 Finance Ministers on 9th and 10th July 2021.

The consensus amongst 130 member countries is a significant development and in all likelihood will be implemented and accepted internationally as planned.

Bahrain, Newsletter

Bahrain Attracted 885 Million USD Investments in 2020: Economic Development Board Reported

February 11, 2021

The investment promotion agency of the Kingdom of Bahrain surpassed targeted investment by attracting a whopping close to 1 billion USD in foreign direct investment in 2020, despite the adverse economic impact of covid 19 pandemics.

It was announced in a press briefing after a board meeting of the Economic Development Board (EDB) chaired remotely by His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince Prime Minister and EDB chairman.

The EDB attracted USD 885 million as a foreign investment last year that would create more than 4,300 employments during the next three years, the board reported.

Accumulated investments in the kingdom over the past 10 years continued to grow touching around 1 billion USD annually.

The quantum of accumulated foreign direct investments as a percentage of the kingdom’s GDP in 2019 was around 78 per cent, almost double the world average of 42 per cent as per reports published by UN Conference on Trade and Development (UNCTAD) and the International Monetary Fund (IMF). FDI in Bahrain stood at 28.9 billion USD in 2019, as per UNCTAD data.

During the meeting, Royal Highness Prince Salman reiterated the importance of economic diversification in non-oil businesses as a measure of sustaining and growing the national economy that can help capitalise on the country’s economic resilience.

This economic resilience, as well as other national competencies, allowed the kingdom to navigate its way through a variety of global challenges, His Highness emphasized.

His Highness Prince Salman also pointed out that the economic stimulus package announced has exceeded all past packages launched following directives from His Majesty King Hamad. The economic stimulus has been aimed to mitigate the adverse economic impact of Covid-19 and played a pivotal role in promoting recovery and sustaining positive growth across healthcare and several other essential economic sectors.

He also remarked that Bahrain has taken timely, careful and balanced actions to alleviate the impact of the pandemic on the community and the country’s economy.

Precautionary and preventive measures based on community awareness and co-operation, while continuing to allow movement for daily necessities and commercial and economic activities and maintaining open borders for travellers, had a clear impact on reducing Covid-19 repercussions at all levels.

HRH Prince Salman emphasised that the government will continue to implement wide-ranging economic strategies and attract foreign investment in developing the national economy.

This will in turn enable the private sector to play a greater role in economic growth, create further job opportunities for citizens and enhance the kingdom’s economic and investment position both regionally and globally.

Praising last year’s success of EDB in attracting foreign companies for business setup in Bahrain, he noted that Bahrainis continue to remain at the heart of all development plans.

During the meeting, EDB’s chief executive Khalid Humaidan informed board members about the latest economic indicators and developments regarding the performance of the national economy and investment position.

H.E. Khalid Humaidan said, “Despite the challenges faced across the globe due to COVID-19, we were able to continue the momentum from 2019, attracting hundreds of millions of dollars in investment from around the world.

“Investors are increasingly turning to the region’s tried-and-tested business environment, where our commitment to building a pro-investor ecosystem is backed up by robust regulation. This, and our longstanding economic diversification efforts, show Bahrain is focused on enabling growth in a wide range of sectors,” he also added.

He also cited some examples of some of the most prominent local, regional, and international investments in the kingdom, including from GCC, European, and Asian companies to support his statements.

Several prominent business entities after company formation in Bahrain have launched operations in the Kingdom with funds raised from local, regional and international companies. They have invested in several major sectors including financial services, manufacturing notably in Mondelez’s 90 million USD biscuit factory, logistics and retail services, education including the American University in Bahrain, healthcare services, real estate, tourism, transport and also in Information and Communications Technology showcasing Amazon Web Services (AWS) hyperscale data centre as the most noted and first in this region.

Article, Bahrain

Opening a Branch of a Foreign Company has never been so Attractive in the Kingdom of Bahrain

November 27, 2020

The Bahrain Economic Development Board (EDB), responsible for promoting Foreign Direct Investment (FDI) in Bahrain particularly focuses on attracting FDI in Manufacturing, Information Technology, Communication, Logistics, Tourism, Financial Services and Leisure sectors. The EDB reinforced its position and commitment as one of most liberal economic institutions by winning the United Nation’s Top Investment Promotion Agency award in the Middle East for its role in attracting large-scale foreign investments and Bahrain company formation.

The Government of Bahrain puts minimum restrictions on the right of ownership and establishment of a foreign company and allows foreign private companies to form and own business enterprises and engage in all forms of profitable ventures.

There only exists a small list of business activities with the Ministry of Industry, Commerce and Tourism (MoICT) restricted to Bahraini ownership such as Press and Publications, Workforce agencies, Clearance offices and Islamic pilgrimages.

The recent amendments announced to the Bahrain Commercial Companies Law ( BCCL) are aimed at furthering Bahrain’s business-friendly reforms to foreign investments and aligning Bahrain’s Economic Vision for 2030 in line with the diversification program of the economy. The amendments include speedy company registration process and stronger corporate governance. Despite global concerns about falling oil prices, FDI flow in Bahrain continues to grow due to reforms in the process of doing business in Bahrain.

Benefits of Establishing a Business in Bahrain

The strategic location of Bahrain at the centre of the Middle East Gulf countries allows easy access to every market in the Middle East and North Africa.
Among all GCC member nations, Bahrain offers the lowest cost for Industrial land and office rentals, the basic cost of establishing a business.
Despite oil and gas being the major contributor to its GDP, Bahrain is diversifying its economy and wooing foreign investors with several business incentives. Bahrain’s economy has grown for many years and has become a key regional and global hub for business.
Accessing local authorities is much easier in Bahrain in comparison to other neighbouring countries, for support and dispute resolution in business. EDB, MoICT, BDB and Tamkeen also provide support to the foreign investors on how to start a small business in Bahrain.
Bahrain is one of the most liberal and flexible countries in the Arabian Gulf with a diverse and multicultural population. The country with approximately 50% expatriates has supportive multiple entry visa policies.
Though Arabic is the national language, English is widely spoken and used in business in Bahrain.
Bahrain offers multiple incentives to entrepreneurs including 100% foreign ownership, zero taxes, an attractive regulatory environment and an ecosystem designed for promoting startups and providing support in scaling up businesses.

Business Establishments in Bahrain

Bahrain essentially offers eight different options to the foreign investors willing to do business and commercial activities in Bahrain such as

With Limited Liability company
Partnership company
Holding company
Single Person company

Limited Partnership company
Joint Stock or Shareholding company-Open
Branch of a Foreign company
Joint-stock or shareholding company- Closed

A Branch of a Foreign company is one of the most sought after options to foreign investors as it offers a lot of advantages.

Branch of a Foreign Company in Bahrain

A foreign company, incorporated and registered outside Bahrain can be registered as an operational office, regional office or a representative office and by the rules and regulations of foreign company registration in Bahrain. A Bahraini national or a company from a similar industry should be engaged as a sponsor unless the branch or office is established as a distribution centre for regional goods and services.

Principal Features of Branch of a Foreign Company in Bahrain

The parent company shall be responsible for bearing all liabilities of its branch in Bahrain.

Business operations are only allowed when there is a local office in Bahrain.
Operational offices can only undertake business operations.
Representative and regional offices are allowed for marketing and promotional activities only.
No minimum share capital is needed.
Appointing a Branch Manager is mandatory.
A local sponsor is needed for an operational office except when the branches are licensed by Central Bank of Bahrain (CBB) and the Committee for Organizing Engineering Professional Practice (COEPP).
Banking, Insurance and investment activities are permitted.
The Parent company needs to issue a Bank Guarantee in favour of the Ministry of Finance and National Economy.

Registration of Branch of a Foreign Company in Bahrain

The registration process for a foreign company branch is usually completed in 2 to 4 week time once all documents are in order. The registration process begins with an application for commercial registration and choosing a unique company name.

The process steps involved in registering a Foreign company branch are

Filling out a registration application form with all necessary details
Documenting Memorandum of Understanding (MOA) and Articles of Association (AOA) and receiving preliminary approval from the Ministry of Commerce.
Obtaining local Municipal approval for securing an office space
Notarizing the MOA and other documents, as appropriate and submitting online to the MoICT
Opening a national bank account and receiving the capital deposit certificate
Depositing a guarantee to the bank in the name of the branch, the agent or an official representative and the order of the Ministry of commerce and industry
Receiving the Certificate of Registration (CR) from the ministry
Publicizing the incorporation in the Official Gazette
Registering for Social Insurance for the hiring of employees

Documentation Requirements for Registering a Foreign Company Branch in Bahrain

Filled application form of company registration
Pre-approved documents from external entities
Sponsorship agreement for operational branches
Copy of CR
Copy of MOA and AOA
Resolution of Board of Directors
Guarantee certificate from the Parent company accepting full responsibility of the Bahrain branch
Authenticated Power of Attorney whenever necessary, e.g. Outsourced Consultancy Services

IMC helps entrepreneurs and business organizations create value and is committed to delivering services that exceed customers expectations.

We, at IMC, are a group of high calibre professionals acquainted with the Bahraini business and Tax laws including their culture and preferences and can render you every help every time in your quest for a foreign company branch in Bahrain.

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Blog

Overview

Benefits of Company Formation in Bahrain

Investment Climate in Bahrain

Promoting Investment and Trade: Free Trade Zones (FTZ) and Free Port

Types of Companies in Bahrain

1. Joint Stock Company (JSC)

Public Joint Stock Company

Closed Joint Stock Company

2. Limited Liability Company (LLC)

3. Single Person Company (SPC)

4. Limited Partnership Company (LPC)

New Company Registration in Bahrain

Pre-incorporation Steps for company registration in Bahrain

Process Steps for company registration in Bahrain

Documents for Company Registration in Bahrain

Tax Considerations in Bahrain

Takeaway

Pre-Incorporation Advice

Types Of Companies

Documents Required For Company Formation

Free Zones in Bahrain

Advantages

Bahrain International Airport (BIA)

Bahrain Logistics Zone (BLZ)

Bahrain International Investment Park (BIIP)

What is the role of a company secretary?

Why outsourcing of company secretarial services is beneficial for companies?

Cost Advantage

Savings in Time and Efforts

Improved Investor Confidence

Wide Range of Services

Earlier Access to Legal Updates

Improved Goodwill

Access to advanced technologies

Risk Mitigation

Takeaway

What needs to be addressed by the Businesses in Bahrain?

What needs to be the focus areas for Bahrain businesses?

How can IMC help?

PILLAR ONE

Scope

New Taxing Right Calculation

Revenue Sourcing

Determining Tax Base

Segmentation

Marketing and Distribution Profits Safe Harbour

Elimination of Double Taxation

Tax Certainty

Administration

Digital Service Tax (DST) Removal

Implementation

PILLAR TWO

Status of Rules

Scope

Design of Rules

Calculation of Effective Tax Rate (ETR)

Minimum Rate

Carve-outs

Additional Exclusions

Global Intangible Low Taxed Income (GILTI)

STTR and Bilateral Treaties

Implementation

Clarifications Requirements

Future Steps

Benefits of Establishing a Business in Bahrain

Business Establishments in Bahrain

Branch of a Foreign Company in Bahrain

Principal Features of Branch of a Foreign Company in Bahrain

Registration of Branch of a Foreign Company in Bahrain

Documentation Requirements for Registering a Foreign Company Branch in Bahrain

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