Bahrain: the kingdom bets on 0% to attract the wealthy

Bahrain does not levy any general tax on personal income or corporate profits, nor any withholding tax. The applicable rate is 0%¹ for individuals and 0%² for companies.

This absence has two exceptions. The hydrocarbons sector, which is subject to a long-standing regime of its own. And the global minimum tax, introduced for multinational groups within its scope.

This second exception marks the end of the principle's absolute character. A state that writes a tax on profits into its law, even one limited to very large groups, now has the instrument at its disposal.

The real burden lies elsewhere: value added tax applies at the standard rate of 10%³ since 1 January 2022.

Bahrain was the first Gulf state to introduce value added tax, and then the first to double its rate. This is no detail: it is the most reliable signal available on the direction of public finances in the region.

The kingdom is the least resource-rich in the region and the most dependent on its neighbours. It was therefore forced to act before them, and its path probably foreshadows theirs.

Qatar, by comparison, has not yet introduced value added tax — its rate remains 0%⁴ — but itself presents this situation as transitional. Its corporate tax stands at 10%⁵.

For a long-term plan, the conclusion is clear: the absence of direct taxation in the Gulf is real today, but it is no longer a structural given. It is shifting towards consumption, which hits residents in their everyday lives.

We do not publish the tax residency criteria used in Bahraini law or the conditions for issuing a certificate: they do not appear in the sources we have been able to consult. Yet this is the document on which the application of any tax treaty depends.

Residence has traditionally been based on sponsorship by an employer, but the kingdom has opened an independent route based on property ownership.

This so-called self-sponsorship permit is open to owners of a property worth at least BHD 50,000⁶, or about about $132,000⁷.

This threshold is the lowest in the Gulf, an order of magnitude below that of the Emirates or Qatar. It is the main selling point of the Bahraini scheme, and it makes the region accessible to mid-sized estates.

Two caveats come with it. The property must be located in an area open to foreign ownership, and keeping the property is a condition for keeping the permit. Finally, the market is narrow and its liquidity low.

1. The absence of direct taxation is stated by an official source, but it already has two exceptions.
2. Value added tax has doubled since its introduction: the burden has shifted towards consumption.
3. The BHD 50,000⁶ self-sponsorship threshold is the lowest in the region, subject to the area.
4. A residence permit is not a tax residency certificate: without one, no tax treaty can be relied on.
5. A French national whose household or centre of economic interests remains in France remains domiciled there.

Bahrain therefore occupies a particular place in the Gulf: more socially open, cheaper, more accessible, but also more economically dependent on its neighbours and further along in the transition to consumption-based taxation. For an expatriate, it is a destination where the cost of entry is modest and the quality of life real; for an investor, a narrow market whose value depends largely on decisions taken elsewhere.