Starting a Business in Bahrain

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Starting a Business in Bahrain

Bahrain offers a variety of incentives to the prospect of starting a business and investing in Bahrain including its tax free economy. The Bahrain lifestyle is cosmopolitan and liberal, and there is a relaxed social environment which makes it a popular area with tourists from the region. Bahrain has a liberal business environment – that offers 100% foreign ownership without any free zone restrictions and no corporation, personal income, wealth or capital gains taxes.

Economy of Bahrain

According to a January 2006 report by the United Nations Economic and Social Commission for Western Asia, Bahrain has the fastest-growing economy in the Arab world. Bahrain also has the freest economy in the Middle East and is twelfth-freest overall in the world based on the 2011 Index of Economic Freedom published by the Heritage Foundation

In 2008, Bahrain was named the world’s fastest-growing financial center by the City of London’s Global Financial Centres Index. Bahrain’s banking and financial services sector, particularly Islamic banking, have benefited from the regional boom driven by demand for oil. Petroleum production and processing is Bahrain’s most exported product, accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Aluminium production is the second-most exported product, followed by finance and construction materials.

Bahrain has the freest economy in the Middle East

Unemployment, especially among the young, and the depletion of both oil and underground water resources are major long-term economic problems. In 2008, the jobless figure was at 4%, with women over represented at 85% of the total.

The economy of Bahrain is heavily dependent upon oil and gas. The Bahraini currency is the second-highest-valued currency unit in the world. Since the late 20th century, Bahrain has heavily invested in the banking and tourism sectors. The country’s capital, Manama is home to many large financial structures. Bahrain’s finance industry is very successful. Bahrain’s banking and financial services sector, particularly Islamic banking, have benefited from the regional boom driven by demand for oil.

Bahrain GDP
Bahrain GDP

Bahrain Economic Indicators

Bahrain GDP Growth Rate
Bahrain GDP Growth Rate
Source: Central Informatics Organization – Kingdom of Bahrain
Bahrain Interest Rate

In Bahrain, interest rate decisions are taken by the Central Bank of Bahrain. The official interest rate is the One Week Deposit Rate.

Bahrain Interest Rate
Source: Central Bank of Bahrain
Bahrain Inflation Rate

In Bahrain, the inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods.

Bahrain Inflation Rate
Source: Central Informatics Organisation – Kingdom of Bahrain
Bahrain Unemployment Rate

In Bahrain, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. Unemployment Rate in Bahrain increased to 3.90 percent in 2018 from 3.70 percent in 2017.

Bahrain Unemployment Rate
Source: Central Informatics Organisation – Kingdom of Bahrain
Bahrain Government Dept to GDP

Bahrain recorded a government debt equivalent to 90.60 percent of the country’s Gross Domestic Product in 2017.

Bahrain Government Dept to GDP
Source: Central Bank of Bahrain
Bahrain Balance of Trade

Bahrain has been consistently reporting trade surpluses due to oil and gas exports. Bahrain’s other exports are aluminium, chemical products, transport equipment, electrical equipment and textiles. Bahrain’s main imports are fuels, electrical equipment, chemical products, transport equipment, metals and plastics. Bahrain’s main trading partners are Saudi Arabia, the United States, Australia, the United Arab Emirates and India. Bahrain recorded a trade surplus of 1094.30 BHD Million in 2018.

Bahrain Balance of Trade
Source: Ministry of Finance, Kingdom of Bahrain
Currency Bahrain Dinar

The USDBHD spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the BHD.

Currency Bahrain Dinar

Bahrain Stock Market Bahrain Bourse

The Bahrain Bourse All Share Index is a major stock market index which tracks the performance of share-holding companies listed on the Bahrain Bourse. It is a capitalization-weighted index. The BAX has a base value of around 1000 as 2004.The BAX is a stock market index which tracks the performance of large companies based in Bahrain.

Bahrain Stock Market

Bahrain Ease of Doing Business

Bahrain is ranked 43 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Bahrain improved to 43 in 2019 from 62 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operationstronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

Ease of Doing Business in Bahrain
Source: World Bank
Bahrain Bank Lending Rate

Bank Lending Rate in Bahrain decreased to 4.91 percent in the fourth quarter of 2019 from 4.98 percent in the third quarter of 2019.

Bahrain Bank Lending Rate
Source: Central Bank of Bahrain
Bahrain Corruption Rank

Bahrain is the 77 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.

Bahrain Corruption Rank
Source: Transparency International
Bahrain Credit Rating

Standard & Poor’s credit rating for Bahrain stands at B+ with stable outlook. Moody’s credit rating for Bahrain was last set at B2 with stable outlook. Fitch’s credit rating for Bahrain was last reported at B+ with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Bahrain thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for Bahrain as reported by major credit rating agencies.

Bahrain Financial Harbour
Bahrain Financial Harbour

Taxation in Bahrain

Bahrain draws people from all over the world due to its generous tax laws. Workers in Bahrain, including expats, are exempt from income tax, making the quality of living in the country very high, with residents able to save money and enjoy life.

Corporate tax Personal income tax VAT or sales tax Social Security Rate for Companies Social Security Rate for Employees
0% 0% 5% 12% 7%

How to Start a Business in Bahrain

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