EY Street address:
Mail address: 10th Floor, East Tower
P.O. Box 140 Bahrain World Trade Center Manama Manama Bahrain Bahrain
Executive contacts
Ali F. Almarhoos
Xavier Delaunay
+973 1713-5119
Email: ali.almahroos@bh.ey.com
+971 (56) 406-1072 (resident in Dubai,
Email: xavier.delaunay@ae.ey.com United Arab Emirates)
Immigration contact
Xavier Brun
A. Income tax
+973 3356-7192
Email: xavier.brun@bh.ey.com
There is no personal income tax in Bahrain. Employer-paid allowances provided as part of employment income to local and expatriate employees are not taxable for income tax purposes.
Tax residency. There is no definition of a tax resident in domestic legislation.
It is possible to apply for a tax residency certificate in Bahrain confirming the tax residency of the individual for the purposes of a double tax treaty concluded with Bahrain.
B. Other taxes
No capital gains tax is presently imposed in Bahrain. Bahrain does not impose wealth tax, inheritance/estate tax or gift tax.
Bahraini nationals. Bahraini nationals working in the private sector are subject to the Bahraini social security system. Monthly contributions are calculated on the total remuneration up to a maximum of BHD4,000. The applicable rates are provided below.
The total employer contribution amounts to 16% (however, see the next paragraph). The following are the components of the contributions:
• Unemployment contribution: 1%
• Employment injuries: 3%
• Old age, non-employment disability and death: 12%
An increase of 1% will be added to the employer contribution rate on a yearly basis every January until it reaches 20% in 2028.
The total employee contribution amounts to 8%. The following are the components of the contribution:
• Unemployment contribution: 1%
• Old age, non-employment disability and death: 7%
The Ministry of Health charges an annual health insurance fee of BHD22.5 for each Bahraini employee. The fee is paid to the Ministry of Health through the Social Insurance Organization (SIO). If the employer already provides medical or health insurance to its employees, the health insurance fee need not be paid. The employer may approach the Ministry of Health and obtain an exemption letter and present it to the SIO.
Gulf Cooperation Council (non-Bahraini) nationals. Gulf Cooperation Council (GCC) (non-Bahraini) nationals will continue to be subject to their home country social security system while working in Bahrain based on the GCC Unified Law of Insurance Protection Extension passed by the Supreme Council of the GCC. Consequently, the home country social security rates and caps apply.
Non-GCC nationals. Non-GCC nationals working in the private sector are subject to the Bahraini social security scheme. Monthly contributions are calculated on the total remuneration up to a maximum of BHD4,000. The following are the applicable rates.
The total contribution amounts to 4%. The following are the components of the contribution:
• Employer contribution (employment injuries): 3%
• Employee contribution (unemployment contribution): 1%
In addition, employees are entitled to receive an end-of-service benefit on termination of their tenure.
End-of-service benefits. Non-GCC national employees working in the private sector are entitled to an end-of-service benefit if they have completed more than one year of continuous employment.
Prior to 1 March 2024, employers internally accrued monthly amounts and made a lump-sum end-of-service payout to the employee at the end of the employment tenure.
Effective from 1 March 2024, under a new end-of-service benefits system for non-Bahraini employees, private sector employers are required to pay the monthly end-of-service contributions electronically through the SIO portal, replacing the previous accrual system.
At the end of the employment period, employees should apply to the SIO for their end-of-service entitlement.
For entitlements relating to years or periods of service prior to the implementation of the new system, the employer should pay the end-of-service benefit amount in accordance with the traditional system, and effective 1 March 2024, the end-of-service benefit amounts should be paid to the terminated employee by the SIO.
The end-of-service benefit, which is paid at termination, is funded by contributions paid to the SIO. The following are the percentages of the contributions:
• 4.2% per month in the first three years of employment (zero to three years). This equals half a month’s base salary per year.
• 8.4% per month for each subsequent year of employment (more than three years). This equals one month’s base salary per year.
D. Wage Protection System.
The Wage Protection System (WPS) is an electronic salary transfer system that allows employers to pay workers’ wages through authorized banks and financial institutions in Bahrain. The WPS enables
the authorities to create and maintain a database of wage payments in the private sector.
E. Double tax treaties
Bahrain has concluded double tax treaties with the following jurisdictions.
Algeria
Austria
Bangladesh
Barbados
Belarus
Belgium
Bermuda
Brunei Darusslam
Bulgaria
China Mainland
Cyprus
Czech Republic
Egypt
Estonia
France
Georgia
Hungary
Iran
Ireland
Isle of Man
Jordan
Korea (South)
Lebanon
Luxembourg
Malaysia
Malta
Mexico
Morocco
Netherlands
Pakistan
Philippines
Portugal
Seychelles
Singapore
Sri Lanka
Sudan
Switzerland
Syria
Tajikistan
Thailand
Türkiye
Turkmenistan
United Kingdom
Uzbekistan
Yemen
Bahrain’s double tax treaties with the following jurisdictions are in various stages of negotiation, signature and ratification.
Guernsey
Hong Kong SAR
F. Visas
Liechtenstein
Spain
United Arab Emirates
Nationals of the GCC Member States should not require visas to visit Bahrain.
Business visas. Since 2020, sponsored business visas issued online or at the Nationality Passport and Residence Affairs headquarters are valid for up to three months from the time of the issuance of the visas. The visa is valid for multiple entries, one month from the time of the first entry with two weeks of stay to be spent in Bahrain on one visit, which can be extended for another two weeks multiple times.
Visas on arrival. Nationals of 69 countries are eligible for a visa on arrival in Bahrain. The visa on arrival is extended to nationals of certain European countries as well as to certain South and Central American countries. Visitors from an additional 208 countries may apply for e-visas through a simple online process before traveling to Bahrain. Non-nationals with GCC residency and a designation of manager or above can obtain a visa on arrival at the Bahrain Airport.
The cost and duration of visas on arrival and e-visas vary depending on the traveler’s nationality. Visitors applying for an e-visa or who obtain a visa on arrival are issued multiple-entry or singleentry visas. The extension period on these visas is two weeks per extension up to four extensions, or one month per extension up to two extensions. This depends on the issued/approved visit visa (two-week validity or one-month validity).
To avoid any inconvenience, it is recommended that visitors always check their visa eligibility on the Bahrain e-visa website. Golden Visa. Bahrain introduced Golden Visas in 2022. A Golden Visa is valid for 10 years and allows the holder to sponsor dependents. The following individuals are eligible to apply for a Golden Visa:
• Retired individuals (not residing in Bahrain) from Bahrain or any country in the world earning a basic salary of not less than BHD4,000
• Owner of properties in Bahrain with a total value of not less than BHD200,000 when the properties were purchased
• Talented individuals nominated by a government agency in certain fields
• An employee working in Bahrain for no less than five years with an average salary of not less than BHD2,000 in the past five years
• Retired persons who worked in the government or private sector in Bahrain for 15 years or more and their average pension exceeds BHD2,000 during the last five years of residence
Self-sponsored residency. Bahrain allows individuals to obtain a self-sponsored residency (long-term visa) if they meet certain criteria. This residency can be valid for two, five or 10 years, and it allows the holder to sponsor dependents. The following individuals are eligible to obtain a self-sponsored long-term visa:
• Foreign investors who are owners of a company (or part of a company) in Bahrain, receiving a regular monthly income of BHD500 or more and a fixed deposit in Bahrain of at least BHD15,000
• A retired person who worked in the government or private sector in GCC Member States for 15 years or more, has regular monthly income of BHD500 or more and a fixed deposit in Bahrain of at least BHD5,000
• Foreigners who own a property in Bahrain worth at least BHD50,000 and have regular monthly income of BHD500 or more
G. Work and residence permits
To work in Bahrain, all expatriates must have a valid work permit, which generally comes in the form of an employment residence permit. To be allotted work permits, an entity that employs expatriates must satisfy the following conditions:
• It must be established in Bahrain.
• It must be registered with the Labor Market Regulatory Authority (LMRA).
• It must have a certain percentage of Bahraini workers (between 5% and 50%, depending on the industry).
The following documents are normally required to apply for a work permit:
• Copy of passport (validity of a minimum of six months)
• Pre-employment medical certificate as per the LMRA guidelines, showing that the employee is fit to work
• Gulf Approved Medical Centers Association (GAMCA)/NonGAMCA Wafid form with photo affixed
• Copy of a valid residence permit if the medical certificate is completed from the country of residence instead of the country of origin
• Copy of full medical reports
• Signed offer letter or employment contract written bilingually (English and Arabic)
• Copy of apostilled diploma or qualifications (if the job title requires a pre-approval from the relevant authorities [for example, Council for Regulating the Practice of Engineering Professions])
• Copy of Bahraini identification card (CPR card), if any
The LMRA can take up to four to five weeks to process the permit application because of the labor market testing (postponement of 21 days) for an outside applicant application and two to three weeks for an in-country application. After processing, the LMRA publishes the permit status online. Each applicant is allocated an application identification, and the permit status can be checked online through the LMRA website.
Before the employer proceeds with the permit application, it is suggested that the employee inform the future employer as to whether he or she previously worked in Bahrain. This ensures that he or she is not given a duplicate personal identification card. In addition, the employee should inform the employer as to whether he or she holds a current valid Bahraini visa, such as a multiple re-entry business visa. To avoid the disruption of the application process, it is suggested that the prospective employee not enter Bahrain before the work permit is finalized.
After the employee enters the country, another medical exam needs to be carried out to confirm that the employee is fit to work. On completing all the above and providing proof of an address in Bahrain, an expatriate employee is issued a CPR card.
H. Family and personal considerations
Family members. An employee must obtain a Bahrain work permit (which also serves as the employee’s residence permit) before the employee’s family members can obtain Bahrain residence permits.
The following documents and information are required for a family visa (that is, Bahrain residence permit):
• Copy of employee’s passport and digital residence permit
• Copy of the identification pages of the family member(s) passport(s)
• Copy of the apostilled marriage certificate for the spouse
• Copy of the apostilled birth certificate for each child (children must be under 24 years of age)
• Copy of the Bahraini CPR card (if any)
After the residence permit is issued, each family member must obtain a CPR card.
Each family member must provide the following documents to obtain a CPR card:
• Original passport
• One passport-size photograph with grey background
• Apostilled marriage certificate for spouse and apostilled birth certificate for the children
• Copy of electricity bill or letter from the local area municipality confirming the address
Driver’s permits. Bahrain has driver’s license reciprocity with all GCC Member States.
A Bahraini driver’s license can be obtained from the General Directorate of Traffic. In addition, citizens of certain countries that have corresponding international agreements with Bahrain can exchange their home countries’ driver’s licenses for Bahrainiissued driver’s licenses without taking the driving evaluation tests.