Bahrain is one of the most important economic partners and bases for UK companies in the Gulf and the two nations have always had a very strong bilateral commercial relationship.
It can be notoriously difficult to do business in certain areas of the Middle East but Bahrain is relatively relaxed, having the freest economy in the area and the most liberalised in the Gulf Cooperation Council (GCC). Bahrain is one of the UK’s largest export markets in the GCC and the UK exported £295.5 million in goods to Bahrain in 2014, up 9% on 2013. The total value of bilateral trade in 2014 was also up from 2013, it rose by 2% to £451.4 million.
Around 100 UK companies have set up base in Bahrain as the country is a major trading hub and financial centre in the region, with one of the most open economies and a liberal tax regime.
The pros and cons of exporting to Bahrain
Bahrain’s Gross Domestic Product (GDP) grew by 4.8% in 2013 and is then by a further 3.7% in 2014, and strengths of the market include:
- competitive operational costs
- well regulated financial services sector
- advanced logistics services
- dedicated industrial zones
- educated and skilled local workforce
- high quality of life for foreign residents
And the benefits for British companies doing business in Bahrain include:
- good communication links
- direct access into Saudi Arabia via causeway
- most liberal tax regime in the Gulf
- 100% foreign ownership of business assets and real estate allowed with no ‘free-zone’ restrictions
On the downside, there are certain challenges faced by UK businesses exporting to Bahrain, notably:
- delays in payment
- bureaucracy within government agencies, especially for getting licenses
- need to employ a certain quota of Bahrainis to comply with Bahrainisation rules, which aim to improve local employment prospects and reduce reliance on imported labour
- government documentation in Arabic
The top 5 UK exports to Bahrain in 2014 were:
- nuclear reactors, boilers and mechanical appliances
- road vehicles
- electrical machinery and equipment
- optical, photographic and cinematographic, and medical instruments
- articles of apparel and clothing accessories
And don’t forget, if you’re going to do business in Bahrain, you’ll need a reliable and cost effective conference call provider – here’s how to set up a conference call between the UK and Bahrain.
Tax and customs in Bahrain
Tax
Bahrain has a double taxation agreement with the UK and ithas the lowest corporate and personal taxes in the GCC. This means there are very few indirect taxes and no personal income tax, wealth tax on capital gains, nor any withholding tax.
Customs
Any British company looking to export goods into Bahrain for sale or consumption must get a general licence from the Customs Affairs Directorate of the Ministry of Interior.
The GCC’s Common Customs Law sets the framework for the GCC’s import regulations, but each member state administers its own list of prohibited, restricted and exempted products. Exporters who want to re-export within the other GCC markets must refer to individual member states’ lists for full information.
A Certificate of Origin is needed for all exports to clear customs.
Goods manufactured in Israel cannot be imported into Bahrain.
Customs duties are usually 5% for imported goods, but alcohol and tobacco are subject to higher duties. There are many food and medical items that are completely exempt from customs duty, but may require special licensing.
Exemptions also include:
- Goods for re-export
- Capital goods
- Raw materials for manufacturing imports required for development projects.
You may also need some product specific documentation if you’re importing:
- Drugs and medicines
- Food products
- Live animals
- Meat, poultry, animal products and bi-products
- Special permits may also be required for certain products, such as special breed horses, armaments, and insecticides.
If you have any questions regarding documentation, get in touch with Bahrain Customs.
Image from Pablo by Buffer.
