Bahrain is an Island country in the Persian Gulf comprised of several small islands. The biggest Island is Bahrain Island. 1.7 million people populate Bahrain, the majority of whom are Muslims. Bahrain’s history dates back to the Dilmun civilization of the Bronze Age.
Historically, Bahrain was a trade hub of the known world at that time as it was located at the crossroads of many important sea-trade routes. Today, Bahrain’s economy relies heavily on its oil production and exports. Other sectors that support the country’s economy are finance, construction, and tourism.
Bahrain has a heavily Arabic Muslim-influenced culture which is evident from its architecture and traditions. The capital city of Manama is a modern cosmopolitan having a state-of-the-art infrastructure and modern amenities. The annual Grand Prix is a prominent event held in Bahrain.
Types of business structures in Bahrain
Bahrain offers various options to investors and companies in terms of business formats. The registration process is well-structured, simple, and very straightforward.
Different business structures and required paid-up capital can be seen in the table below:
| S# | Type of business structure | Local name | Min. paid-up capital required (USD) |
| 1. | Sole Proprietary Business | Al-Faridah | No paid-up capital required |
| 2. | Partnership | Al-Sharikah | No paid-up capital required |
| 3. | Limited Liability Company (LLC) | Al-Mashoo’Al-Muqayyadah | $53,000 or more |
| 4. | Public Joint Stock Company (PJSC) | Al-Sharikah Al-‘Amah Lil-Siraa’ | $26.5 million |
| 5. | Private Joint Stock Company (PrJSC) | Al-Sharikah Al-Khasah Lil-Siraa’ | $133,000 |
Sole proprietorship
Retail businesses, individual freelancers, and skilled laborers are all examples of sole proprietary businesses. The owner of the business is completely in control of all the decisions and personally responsible for all the losses or liabilities.
Partnership
Al-Sharikah or partnership business requires two or more people to form. All partners contribute to the business either through capital, assets, or skills. The partners in a general partnership are personally responsible for debts and liabilities. Whereas in a limited partnership, a group of partners is only liable to the extent of their share in the business.
Limited Liability Company
An LLC is a formal business structure and requires compliance with several state rules and regulations. It may even require permits and licenses for certain business activities. Small and medium-sized enterprises usually form an LLC to safeguard the personal assets of the owners against loss, debt, etc.
Public JSC
A public JSC is similar to a public limited company and is permitted to raise capital through the public. A JSC has to have a certain organizational structure to operate; board of directors, shareholders, board of managers, etc. Additionally, JSCs are obligated to publish their annual reports, financial reports, and strategic plan on their websites and the official gazette.
Private JSC
A PrJSC is similar to JSC, however, the ownership shares of a PrJSC are not traded in the stock exchange and it is subject to fewer regulations.
Cost of registering and incorporating a company in Bahrain
The cost involved in the registration process is predefined in the Corporate Law of Bahrain. Costs may vary depending on the size, nature, location, and scope of the company. Costs may also be influenced by the level and depth of professional services required during the process.
Here are a few inevitable costs involved in the registration of various company formats.
Sole Proprietorship
The cost of registering a sole proprietorship in Bahrain can range from approximately $265 to $795, depending on the municipality and other local fees.
Partnership
The cost of registering a partnership in Bahrain may fall between $265 and $1,325 approximately, depending on the number of partners and other local fees.
Limited Liability Company (LLC)
The cost of registering an LLC may range anywhere between $1,325-$2,650, depending on the amount of capital invested and other fees.
Public Joint Stock Company (PJSC)
The cost of registering a PJSC can be significantly higher due to the higher minimum paid-up capital requirement. The estimated cost may be between $53,000 and $132,500 approximately, depending on the nature of the business and other fees.
Private Joint Stock Company (PrJSC)
The cost of registering a PrJSC in Bahrain is approximately $1,325 to $2,650.
Cost of doing business in Bahrain
The expenses incurred by a company in the normal course of business in Bahrain are slightly higher than in other countries. Several reasons influence the high cost of doing business in the country, primary influencers may be the rent, labor, duties, etc.
Here is a glimpse of the expenses companies shall expect.
Rent and real estate
The cost of renting an office or commercial space can vary significantly depending on the location and size of the space. The average cost of commercial rent in Bahrain ranges from $20 to $25 per square meter per month.
Labor costs
Bahrain has an expensive labor market majority of which is an educated and skilled workforce. The cost of labor is comparatively high as almost all the labor comes from foreign countries. The minimum wage in Bahrain is approximately USD 795 per month.
Taxes and fees
Bahrain has a favorable tax regime with no corporate or personal income tax, and no value-added tax (VAT). However, businesses may be subject to other fees and charges such as licensing fees, customs duties, and social insurance contributions.
Utilities and infrastructure
The cost of utilities such as electricity, water, and internet can vary depending on the location and usage. Bahrain has a well-developed infrastructure with modern transportation, telecommunications, and logistics facilities.
Other operational costs
Other operational costs such as marketing, advertising, insurance, and maintenance can also contribute to the overall cost of doing business in Bahrain.
Key benefits of registering a company in Bahrain
Among the many advantages businesses can have by incorporating in Bahrain, here are a few major advantages.
Strategic Location
Bahrain is strategically located in the heart of the Gulf region, providing businesses with easy access to major markets in the Middle East, Asia, and Africa.
Favorable Business Environment
Bahrain has a favorable business environment with a liberal economic policy, low taxes, and a simple and transparent regulatory framework.
Skilled workforce
Bahrain has a highly skilled and educated workforce with proficiency in English, Arabic, and other languages.
Advanced infrastructure
Bahrain has a modern infrastructure with advanced transportation, telecommunications, and logistics facilities, making it easier for businesses to operate and access markets.
Access to financial assistance
Bahrain has a well-developed financial sector with access to local and international capital markets, providing businesses with various options for financing and investment.
Strong legal system
Bahrain has a robust legal system with clear laws and regulations that protect the rights of businesses and investors.
Supportive government
The Bahraini government is supportive of businesses and offers various incentives and initiatives to attract and promote investment and entrepreneurship.
