Bahrain confidently ranks among the leaders in business and investment attractiveness, actively competing with the United Arab Emirates. Redomiciliation of a company to Bahrain opens doors to the growing markets of the Persian Gulf, the Middle East, and North Africa. With its advantageous geographical location and favorable business environment, Bahrain serves as an effective launchpad for entering the international arena. If you are interested in «relocating» to this jurisdiction, this material will be useful for you.
Many entrepreneurs are unaware that doing business in Bahrain offers tax and corporate advantages just as significant as those in the United Arab Emirates, for example. These conditions truly make it an attractive option for foreign companies.
Tax advantages
The country has no taxes on profits, sales, or capital gains. The only exception is the oil and gas sector, where a tax of 46% is levied on net profits.
If a company’s annual revenue exceeds 37,500 BHD (approximately 99,600 USD), it is required to pay VAT at a rate of 10%.
Liberal requirements for foreign assets
Bahrain also stands out for its liberal approach to foreign assets, allowing 100% foreign ownership of local companies.
Programs for foreign investors
Bahrain has special support programs aimed at attracting foreign entrepreneurs. The country actively encourages the establishment of startups and business development by offering favorable conditions for investment.
In addition, Bahrain has free economic zones and special free zones with developed infrastructure that create a favorable environment for entrepreneurship:
These zones offer foreign companies in Bahrain a number of additional advantages. However, it is important to note that a company registered in a free zone must limit its activities to within that zone and cannot provide goods and services in Bahrain outside of its free economic zone.
To begin the process of redomiciliation of a business to Bahrain, companies must fulfill several mandatory requirements. It is essential to consider each of them to avoid potential legal complications.
Compliance with the registration jurisdiction
As with any country where redomiciliation has been discussed, the company must be registered in a country whose legislation permits the redomiciliation of businesses to a foreign jurisdiction. Not all jurisdictions support this option, so it is important to verify this in advance.
Corporate documents and procedures
The company’s founding documents must include provisions allowing for redomiciliation. Additionally, strict adherence to the corporate procedures outlined by the legislation of both the original jurisdiction and Bahrain is required..
Completion of the legal procedure
Redomiciliation requires the completion of a legal procedure that includes the collection and submission of documents in both jurisdictions—the original one and Bahrain. During this process, it is necessary to obtain a certificate of continuation in Bahrain, which confirms the successful completion of the redomiciliation.
In general, the redomiciliation procedure to Bahrain consists of the following stages:
The preparatory stage for redomiciling a business to Bahrain includes several important steps that help ensure a successful transition of the company to the new jurisdiction. Here are the main requirements:
1. Approval of company name and activity type
The first step is to choose and approve the company name in Bahrain. The name and organizational-legal form must remain the same as in the country from which the redomiciliation is taking place. It is important to note that the name must be not only unique but also comply with applicable regulations.
Additionally, it is essential to recognize that not all types of activities are permitted in Bahrain. For example, activities such as gambling, alcohol production, and others are prohibited. Therefore, before redomiciling, it is crucial to verify that your company’s activities comply with local legislation.
2.Resolution on redomiciliation
The company’s governing body must officially take aresolution regarding the redomiciliation.
3. Preparation of founding documents
Up-to-date founding documents must be provided to confirm the company’s status and the authority of its representatives.
4. Financial reports
The company should prepare reports on its financial and economic activities, which will be evaluated during the redomiciliation process.
5. Confirmation of registration in the original jurisdiction
Documents confirming the current registration of the company in its operating jurisdiction will need to be submitted.
6. Notification of creditors
The company’s creditors must be officially notified of the intention to change the jurisdiction.
7. Confirmation of financial solvency
The company must demonstrate its solvency and absence of debts related to taxes and fees. It is crucial that at the time of redomiciliation, the company is not in the process of liquidation or bankruptcy.
8. Submission of application in Bahrain
The final step is to submit an application for redomiciliation to the relevant authority in Bahrain, which will initiate the process of the company «moving» to the new jurisdiction.
After collecting all the necessary documents, they are submitted for review to the Ministry of Commerce, Industry, and Tourism of Bahrain (MOICT). This stage includes not only a formal verification but also the possibility of requesting additional documents or clarifications.
The Ministry carefully assesses the submitted materials to ensure that the company fully meets the conditions for redomiciliation. During the review process, the company’s financial condition, tax obligations, and other key factors are analyzed. This is a critical stage that ensures the company’s compliance with the requirements and readiness for a successful redomiciliation in Bahrain.
Once all documents have been verified and all fees paid, the Ministry of Commerce, Industry, and Tourism of Bahrain issues a registration certificate. This important document not only confirms the official recognition of the business in the country but also opens the doors for the full commencement of operations in Bahrain.
Redomiciliation of a business to Bahrain is a step that opens new horizons for the company, allowing it to rethink its structure and strengthen its market position. However, before making such an important decision, it is essential to carefully study all the nuances and thoroughly assess how this will impact the business and its long-term goals. This strategic approach will help you make an informed choice and maximize the benefits of redomiciliation.
| Disclaimer: this publication contains general information and should not be considered legal advice. Companies are advised to seek individual legal consultation to address their specific redomiciliation needs. |
Authors: Egor Zelianouski (e.zelianouski@revera.lega), Marharyta Firsiankova
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