Tax Facts - Bahrain

Gerard Associates Ltd. does not provide individual tax advice, and nothing contained in this briefing should be construed as such.

We make every effort to ensure the accuracy of the information but cannot be held responsible for any liability arising. It is essential that all clients seek tax advice specific to their own personal circumstances with the relevant tax professional of the jurisdiction(s) in which you are liable to tax.

This has been prepared based on our understanding of current legislation and tax practice. However, these are subject to change, and may result in income tax consequences different from those detailed below. We cannot accept responsibility for its interpretation or any future changes to law.

Introduction

Like most of the Middle East states, the Bahraini Government receives most of its revenues from the oil industry.

Tax Year

Not applicable.

Assessment Basis

Not applicable, there is no requirement to file income tax returns.

Income Tax

There is no income tax in Bahrain.

Taxation of Investment Income

There is no withholding tax in Bahrain.

Tax on Property Rental Income

There is no tax on rental income in Bahrain.

Wealth Taxes

There are no wealth taxes in Bahrain.

Capital Gains Tax

There is no capital gains tax in Bahrain.

Inheritance and Gift Tax

There is no inheritance tax in Bahrain.

Regional and Municipal Taxes

A municipal tax is payable by individuals or companies renting property in Bahrain. A 10% rate is levied on the rental of commercial property and residential property occupied by expatriates.

Property Taxes

There are no property taxes in Bahrain.

Stamp Duty/Transfer Tax

A 1% stamp duty is levied on property transfers.

Sales Tax

The only sales tax is one on gasoline, which is levied at a rate of 12%.

Social Security Contributions

The General Organisation for Social Insurance (GOSI) is responsible for the levy of social security taxes in Bahrain. The current rate of contributions to GOSI is 19% for local employees, and 4% for expatriate employees.

Of the payments made in respect of local national employees, employers pay 12% and employees pay 7% of the GOSI, which covers old age, disability, death and unemployment.  For expatriate workers, employers pay 3% while employees pay 1%, and this covers unemployment.

Taxation of Expatriates Living in Bahrain

Apart from social security contributions, expatriates living in Bahrain and Bahraini nationals are taxed (or not taxed) in the same way.