Accounting Outsourcing and
Tax compliance in Bahrain

Bahrain – Accounting Outsourcing and Tax Compliance

Global Expansion Plus provides accounting outsourcing and tax compliance in Bahrain. We provide services with the support of our local accountants and tax specialists. We will perform bookkeeping, accounting, and filing a tax return on your behalf bearing all associated compliance risks. Every state will put in place a tax system to raise revenue. Bahrain is no different. Whether a resident or a non-resident, individual, or corporate, there is a need to understand taxation in Bahrain. Otherwise, you are bound to get on the wrong side of the law.

Bahrain in facts

  • Location: Middle East
  • Territory: 780 square kilometers
  • Capital: Manama
  • Official language: Arabic
  • Currency: Bahraini dinar (BHD)
  • Population: 1,23 million

Corporate income tax (CIT) in Bahrain

The government body that controls the taxation system and VAT, in particular, is The National Bureau for Revenue of Bahrain. Bahrain goes not to have any taxes on corporate income, capital appreciation, or real estate.
The only exception is the oil and gas industry. Entities that operate in the oil and gas industry paying 46% on net results from activities like gas extraction, refinement of hydrocarbons in Bahrain. The rate applies to both resident and non-resident companies operating on the territory of Bahrain.

Value-added Tax (VAT) in Bahrain

The standard VAT rate is 5%. According to the Bahrain Tax Code, goods and services may be subject to a standard rate of 5%, subject to 0% VAT, or even exempt from VAT.
VAT registration is required after BHD 500,000 in revenue. Companies can register for VAT after reaching a turnover of BHD 18,750.

Personal Income tax (PIT) in Bahrain

Like in most Islamic States, Bahrain does not have a personal income tax.

Payroll-Related Taxation in Bahrain

The only payroll tax that Bahrain has is social security contribution.
The employer pays social security at the rate of 12% for Bahraini citizens and 3% for non-Bahraini nationals. Social security contribution is paid from gross salary and capped at BHD 4,000.

Import/ Export related taxation in Bahrain

Custom duty

Bahrain taxes imported goods at a standards rate of 5%. Some goods have different custom duties:
  • Alcoholic beverages are taxed at 225%;
  • Tobacco and related products are taxed at 200%;
  • Paper and aluminum products are taxed at 20%;

Excise taxes

Bahrain is part of the Common Excise Tax Agreement of the States of the Gulf Cooperation Council. Under this agreement, the following products are subject to excise taxes:
  • Tobacco and energizing soft drinks are taxed at 100%;
  • Other soft drinks are taxed at 50%
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