The lowest taxes and cost base
Cost Competitiveness
Bahrain has the lowest tax jurisdiction within the region and offers a level platform nationally and not just within specific and regulated ring-fenced ‘free zones’. Bahrain permits 100% foreign ownership of industrial projects and the establishment of representative offices of foreign companies with no local sponsor.
Since 2001, foreign firms and GCC nationals were allowed by law to be land owners. Non-GCC nationals could own high-rise commercial and residential properties in addition to businesses in specific geographic areas in such fields as banking and finance, tourism, health and training institutes. Since 2006, all nationalities were able to own commercial or investment properties, with exception to high rise-residences and specific properties in large developments which could be owned free hold.
Bahrain offers the best value for money- it has the lowest living costs within the region and operating costs for businesses.
Businesses can run successfully by cutting costs, and city living remains amongst the lowest and best quality in the GCC. In a study conducted by UBS on 73 cities worldwide based on rent, food and services, Bahrain ranked the lowest in cost of living compared to its neighbours. Within the GCC, the report studied living costs in Dubai (United Arab Emirates), Doha (Qatar) and Manama (Bahrain).
According to the survey covering a “basket” of 27 services, including haircuts, phone charges, dry cleaning, movie tickets, and restaurant meals, Dubai was most expensive ahead of Doha then Bahrain.
Dubai “service basket” was $890 higher than New York and London and even more so than the global average of $503. The same basket would cost $620 in Doha and $450 in Manama.
In terms of rent, a 3-bedroom unfurnished apartment in Dubai would cost $3,710. An unfurnished 3-bedroom apartment in Doha would cost $2,290 and $1,900 in Manama.
The only other cities that were overall more expensive than Dubai were Hong Kong and New York, respectively.
The Lowest Taxes in the GCC
Bahrain has the lowest corporate and personal taxes in the GCC with:
- No capital gains tax and no withholding tax.
- No personal income tax
- No tax on capital gains
- No withholding tax
- No restriction on repatriation of capital, profits or dividends
- Few indrect taxes (e.g. 10% municipal tax on rents)
A report published by the World Economic Forum (WEF) concluded that Bahrain has the fourth most favourable tax regime in the world, out of the 55 leading economies surveyed.
The Financial Development Report ranked Bahrain 27th, overall, in terms of its financial system, up from 28th in 2008. It concluded that Bahrain “shows competitive advantages in the quality of its institutional environment, including a substantially liberalized financial sector and solid corporate governance.”
As a result of its open, well-regulated economy Bahrain is ranked as having the fourth most favourable tax regime, is 12th in terms of being a low cost location to do business and was hailed for its substantially liberalised financial sector (16th) and solid corporate governance (20th).
The report also gave Bahrain high marks for liberalisation of the domestic financial sector, with Bahrain being ranked 1st for corporate governance and 2nd for private monitoring of the banking industry.
Value for Money and Low Cost Base
• Companies can support customers from a high-quality, low cost base.
• High quality, value-for-money business infrastructure. Office costs in Bahrain are 56% lower than in Dubai Global (Source: Investment House Real Estate Report 2007) and 48% lower than in Doha (Source: Gulf Business Salary Survey, 2008).
• There is a flat rental rate for industrial land ranging between USD 1.33 and 1.75 per m2 per year
A Cost Efficient Business Base
| Country | Sales and Marketing Head
(US Dollars) | General Manager,
(US Dollars) |
| UAE | 14, 025 | 19, 110 |
| Saudi Arabia | 14, 550 | 18, 230 |
| Qatar | 14, 475 | 16, 200 |
| Bahrain | 12, 400 | 13, 723 |
Source: Annual Salary, Gulf Business 2009
Corporate income tax rates in GCC Countries
Source: Ernst & Young Worldwide Corporate Tax Report, 2007
Business Zone
The Bahrain Investment Wharf is a 1.7 million m2 zoned Industrial development comprised of:
• Industrial Park: For medium and small industries (800,000 m2)
• Logistics Park: For warehousing, storage, cold storage, redistribution, and IT services (190,000 m2)
• Business Park: For low-rise office blocks, training centre, conference and exhibition halls (70,000 m2)
• Residential Park and service Buildings: For retail units, labor accommodation and hotel (640,000 m2)
The Bahrain International Investment Park
• Investment up to date stands at $750m
• Modern business zone housing international and manufacturing companies (250,000 m2)
• Zero corporate tax
• Exemption from GCC customs duties
• Freedom of hiring for five years
• 100 per cent foreign ownership and renewable 50-year leases
• 84 companies have signed up, taking 60 per cent of the site and employing 8,400 people
• Tenants include Kraft Foods and Saudi Arabian Amiantit Company.
(Source: Meed.com-Special Report: Bahrain - Vision 2030 plan takes shape).
Source: Economic Intelligence Unit, 2008