Bahrain Company Formation
Healy Consultants Group PLC
23 October, 2014
Bahrain is extremely welcoming of international entrepreneurs and the establishment of business startups, due to the small country relying heavily on tourism and foreign investment. There are a number of advantages of Bahrain company registration. Bahrain is a great location for a companys headquarters to be based, especially if the company is interested to tap into the Middle Eastern and African markets. Bahrain also delivers to the Saudi Arabian market faster and better than the United Arab Emirates, due to the two countries being linked by the King Fahd Causeway. As Bahrain is extremely welcoming to foreigners, a large majority of companies can be 100% owned. The Bahrain-US Free Trade Agreement, established in 2006, allows American entrepreneurs to have the same rights as Bahrainis. This enables 100% US ownership in all Bahrain industries, and erases tariffs on industrial and consumer products. Bahrain is known as the most liberal country in the Middle East and Africa. With its business laws being liberal and investment friendly, the country was voted the freest economy in the Middle East and the 12th freest economy globally by the 2012 Heritage Foundations Index of Economic Freedom. The cost of living is quite reasonable too, with the expenses being 20% lower than those of its oil rich neighbors. Bahrain is known as the center for Islamic banking, with global financial services growing 20% annually, Bahrain as a financial hub is likely to vastly expand. Lastly, a Bahrain registered company enjoys the benefits of being able to maximize their profits to the fullest, while legally minimizing their international tax liabilities. This is due to the fact that there are no corporate taxes, personal taxes, withholding taxes, value added taxes, import and export taxes, and capital gains taxes. On of this, Bahrain registered companies also enjoy the benefits of the 61 international double taxation and free trade agreements.
There are a number of business entities available in Bahrain. These include: wholly foreign owned entities, Bahrain limited liability companies, shareholder agreement with a Bahrain or US national, limited liability company, free zone companies, a foreign branch office and a representative office, single person companies, joint ventures, sole proprietorships, Bahrain shareholding Company, non-for-profit company, partnerships, and Bahrain exempt company.
There are numerous advantages to opening a Bahrain corporate bank account. The Bahrain banking sector is the most developed in the Middle East, and is also the Gulfs financial center. With a Bahrain bank account you can be certain that your company will be provided with outstanding support. It is not required that the client be present in the country at the time of opening. There is currently no restrictions on foreign companies opening a corporate Bahrain bank account, which comes with full internet banking facilities.
All tax is exempt in Bahrain, this tax includes: personal income tax, capital gain tax, VAT, withholding tax, and corporate tax. However employer social security contributions must be made, with 12% for nationals and 3% for expats. There is also a Double Taxation Avoidance Agreement present in Bahrain which includes 39 countries. It is required that all imported goods which arrive in Bahrain receive customs clearance through the Directorate General of Customs. However, if an importer fails to pay the duty, then customs authorities have the right to sell all of the good in order to recover the duty amount. These countries include: Singapore, Thailand, Iran, India, Malaysia, France, Germany, Egypt, Turkey etc.
There are a few legal and compliance issues which need to be taken into account before completing a company registration in Bahrain. The country is a full member of the World Intellectual Property Organization, the World Trade Organization, the Paris Convention, the Patent Cooperation Treaty, the WIPO Copyright Treaty, the WIPO Performances and Phonograms Treaty, and the Rome Convention. Foreign companies are unable to execute business in Bahrain, unless it is license to do so by the Ministry of Industry and Commerce. Every Bahrain business entity must have a fully appointed manager. The manager is selected by the memorandum of association, and unless otherwise stated, the manager will enjoy the full powers of administration, and his acts are binding to the company.
There are also several disadvantages to registering a company in Bahrain. Competing company registration in Bahrain, along with the opening of a corporate bank account can be a quite tedious process since on average it will take three months. This is due to the government and authorities lacking to provide the necessary approvals needed. The country has high corruption rates, as do many oil rich Arab counties. The quality of Bahrain staff is usually that of a low quality, along with this companies are required to give locals hiring priority; therefore, locals tend to have less of an incentive to compete. The cost of registering a company in Bahrain is becoming increasingly expensive, these incurred expenses are accumulated from the multiple government fees, compulsory office rentals, compulsory hiring of staff, and high paid up share capital. There are restrictions on foreign ownership in certain industries. Foreign ownership is prohibited in several industries, including: real estate, media, transportation, automotive rental, oil product supply, Muslim services, foreign manpower sourcing, and accounting. Foreign ownership is restricted to only 49% in the industries of trade, retail, travel and tourism, health care and pharmacies.
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