Accountants and company formation in Bahrain

Setting up a company in Bahrain

To set up a company in Bahrain as a foreigner, you register it online through Sijilat, the commercial registration portal of the Ministry of Industry and Commerce (MOIC). Foreign owners can hold 100% of every company form for most activities, but the activity you pick decides which approvals you need, so everything starts with the activity code.

The route, in short:

1. Check your activity in the Unified Directory of Business Activities.
2. Choose the legal form: usually a W.L.L., or a branch of your foreign company.
3. Get an eKey and prepare the documents, including certified parent company papers.
4. Reserve the commercial name on Sijilat.
5. File the application: security clearance, articles of association, capital deposit.
6. Obtain the licences that the activity needs from other authorities.
7. Register with the National Bureau for Revenue for VAT once you reach the threshold.

Foreign ownership rules before you set up a company in Bahrain

The MOIC procedures guide for establishments and commercial companies sets out three groups of owners. Bahraini citizens may use every form. GCC and US citizens may also trade through a sole proprietorship. Citizens of other countries, Arab or foreign, may carry on all economic activities through any form of commercial company, except for certain banned activities.

For each company form, the guide adds the same line: GCC citizens and foreigners may own 100% of the shares, “by activity”. In practice that means full foreign ownership is the default, while a short list of activities stays closed or needs a Bahraini partner. That list is not something to guess at. Look up your exact activity before you plan the structure.

A sole proprietorship (individual establishment) is not open to most foreign founders. It requires the owner to be a Bahraini or GCC citizen, a resident of Bahrain, or a citizen of a state with a free trade agreement with Bahrain, and at least 18 years old. Everyone else forms a company.

Step 1: Look up the activity

Sijilat classifies every activity by its ISIC4 code and keeps registration separate from licensing, according to the Sijilat portal’s own description. The commercial registration (CR) makes the business a legal entity. The licence to carry on a given activity comes from the authority for that sector, and the Unified Directory of Business Activities tells you which one.

The MOIC guide lists this lookup among the first things to do: decide the activity, check the conditions of the licensing bodies in the directory, then pick the legal form, “noting that some commercial activities require a particular legal form”. A consultancy, a trading company and a payment business can all be foreign-owned, yet they follow very different paths once the regulators are involved.

Financial services need the Central Bank first

If the business takes deposits, writes insurance, manages other people’s money, lends, changes money or provides trust services, the Central Bank of Bahrain is the regulator. Article 40 of the Central Bank of Bahrain and Financial Institutions Law 2006 bars anyone from providing a regulated service without a CBB licence. The CBB normally holds at least one meeting with an applicant before the formal application, charges a fixed application fee of BD 100 and must decide within 60 calendar days of a complete application. Operating or presenting yourself as licensed before approval carries a maximum penalty of BD 1 million.

Step 2: Choose the legal form

The Commercial Companies Law, Legislative Decree No. (21) of 2001, sets out the forms. Sijilat’s business types page summarises the current requirements. The ones foreign founders use most:

The W.L.L.

The W.L.L. is the usual choice for a trading or service business. There is no minimum capital and no set nominal value per share, and it can be owned by individuals or by a company. All cash and in-kind shares must be fully paid before incorporation, and the name must end with “with limited liability”. The company appoints at least one auditor. Instead of filing a financial report, the partners may file a solvency letter from the auditor, unless losses reach 50% of the capital. A manager runs the company and does not have to be a partner.

A W.L.L. cannot do insurance, banking or invest third parties’ funds. Those activities need a shareholding company and a CBB licence.

Branch or representative office

A foreign company can also work through a branch. Under Article 347 of the Commercial Companies Law, it needs a prior licence from the Ministry and registration in the Commercial Registry, and Article 348 requires a security from the head office. The branch keeps a head office in Bahrain, carries the parent’s name followed by “branch of a foreign company”, and files audited financial statements within six months of its year end.

A representative office is narrower. It may only market and promote the parent’s business and may not deal directly with clients in Bahrain. Anyone who trades through a branch or office before its registration is complete becomes personally and jointly liable for that business.

Holding companies

A holding company owns shares in Bahraini or foreign companies. The MOIC guide says it takes the form of a shareholding company, a W.L.L. or a single person company, and follows the rules of the form it takes.

Step 3: Get an eKey and gather the documents

Before applying, each person who will sign on Sijilat needs an electronic key from the e-Government Authority. You can also file through a professional intermediary office, or through an authorised signatory holding a power of attorney certified by a notary public. Many founders from abroad use one of these two routes.

For individual founders, the MOIC guide asks for a copy of each partner’s identity documents. A corporate founder supplies:

• its by-laws and articles of association, with any amendments,
• its latest audited financial statements,
• a board or general assembly resolution to take part in the new company.

Documents of foreign corporate founders must be certified by the licensing authority in the country of registration, the Ministry of Foreign Affairs or the Embassy of the Kingdom of Bahrain. Sijilat accepts documents in Arabic or English; anything in another language needs a certified Arabic translation. Certification abroad runs on your home country’s timetable, so start it first.

Step 4: Reserve the commercial name

Names are booked online on Sijilat. Under the MOIC rules, the name may not already be registered to someone else, may not conflict with public order, customs or religious beliefs, may not contradict the company’s activity and may not infringe a trademark without the owner’s licence. Prepare two or three options.

Step 5: File the Sijilat application

The application runs online. The MOIC guide lists the steps for a commercial company:

1. Submit the application in person, through a professional intermediary office or through an authorised representative.
2. Obtain security clearance for foreign investors.
3. Attach the draft articles of incorporation and association.
4. Attach the capital deposit certificate once the required approvals are in.
5. Attach a valuation from an expert or auditor if capital is paid in kind.
6. Attach any documents the licensing authorities require.

The Ministry then sends the file to the licensing authorities for approval, collects a municipal fee of ten dinars, records the articles and issues the CR certificate electronically once the fees are paid online. A paper copy of the certificate costs two dinars, and the company is published in the Official Gazette or on the Ministry’s website.

Bank account and capital

The capital deposit certificate comes from a bank, so the bank account is part of incorporation, not a later step. Banks run their own checks on the shareholders, the managers and the source of funds, and their timing varies more than the Ministry’s. Have a clear description of the business and the ownership chain ready before you approach one.

Step 6: Obtain the activity licences

With the CR in place, the company still needs the approvals tied to its activity: municipal, health, industrial or financial, depending on the sector. Sijilat links to the authorities, which is why it separates registration from licensing. Industrial projects, for example, apply through the system for a preliminary approval and then an industrial licence, each valid for a year.

Staff who move from abroad need work and residence permits. The rules for those sit with other authorities and depend on the role, so plan them alongside the hiring timeline.

Step 7: Register for VAT

VAT in Bahrain started at 5% on 1 January 2019. Since 1 January 2022 the standard rate has been 10%, as the National Bureau for Revenue (NBR) states.

A resident business must register once its annual VATable supplies, standard and zero rated, exceed the mandatory threshold of BHD 37,500. Voluntary registration is open above BHD 18,750. A non-resident with no fixed establishment that supplies consumers in Bahrain must register within 30 days of its first such supply, whatever the value. Registration starts with an NBR profile on the NBR online portal.

Returns follow the size of the business. A VAT payer with annual supplies up to BHD 3 million files quarterly, and one above that files monthly. Each return is due by the last calendar day of the month after the period ends. A resident with less than BHD 100,000 in annual supplies may ask for annual periods.

Tax on company profits

Two measures matter for a new company, and only one is in force.

Domestic Minimum Top-up Tax (DMTT). Under Decree Law (11) of 2024, the DMTT applies to members of multinational groups with global revenue of EUR 750 million or more, so that their Bahrain profits bear a 15% minimum tax. It applies for fiscal years starting on or after 1 January 2025. A small or mid-sized foreign-owned company falls outside it.

Proposed corporate income tax. On 30 December 2025 the NBR described a draft law that proposes a 10% tax on the profits of local companies with annual revenue above one million Bahraini dinars or net annual profits above 200,000 dinars, charged only on profits above the 200,000-dinar threshold. It is scheduled to take effect in 2027, subject to agreement with the legislature. The draft would exempt salaries and allowances paid to Bahraini employees from taxable revenue, and groups already paying the DMTT would not pay the extra 10%. Treat the draft as a planning point, not settled law, and check its status before you finalise a budget.

Keep the company in good standing

Incorporation starts a yearly cycle:

• CR renewal. A Bahrain CR is valid for one year. Sijilat lets you renew the CR and each activity up to six months before expiry, and the Bahrain Chamber membership from three months before.
• Audit or solvency letter. A W.L.L. appoints an auditor and files a financial report or an auditor’s solvency letter. A branch files audited statements within six months of its year end.
• Beneficial owners. Sijilat lists recording the ultimate beneficial owner (UBO) among each company’s commitments.
• Economic substance and anti-money laundering. Companies submit the economic substance report requirements and comply with anti-money laundering rules.
• Books. Business books are kept for 10 years.
• VAT returns, once registered, on the monthly, quarterly or annual cycle the NBR assigns.

Our pages on accounting, audit and VAT cover the firms that handle this recurring work.

Common mistakes foreign founders make

• Picking the legal form before the activity. Some activities require a particular form, and some need a regulator’s licence first.
• Leaving certification to the end. Parent company documents must be certified abroad before they are of any use on Sijilat.
• Treating the CR as the finish line. The activity licences, the bank account and permits for staff still have to follow.
• Starting trade through a branch too early. The people who act before registration is complete answer for it personally.
• Budgeting on the draft tax law as if it were final. The 10% proposal still needs the legislature.
• Letting the CR lapse. It runs for a year, and renewal opens six months ahead.

Where to find an adviser in Bahrain

Of the 36 Bahrain firms on Accountanty, 35 take on company formation work. Most are in Manama, with others in Seef. Our company formation page explains what a provider does for you and how to compare quotes, and the residency and visas page lists the firms that handle permits.

Once the activity and the legal form are clear, you have what you need to set up a company in Bahrain. Describe your plan once in a free quote request, and Accountanty passes it to firms that fit.