Sweeping Law Changes Open Way For Foreign Investors

Bahrain is throwing open doors to business by easing rules for starting and running companies for foreign investors.

The government wants to clear the way for entrepreneurs from abroad to set up a business base in the tiny country for trading with other Gulf states and Middle East countries.

Besides changing corporate governance laws, the state is introducing new regulations that allow duty free zones and business hubs for the first time.

Key for expats is a provision that gives all shareholders or directors a residence visa for Bahrain.

Entrepreneurs will also benefit from Bahrain’s no tax economy.

No personal or business taxes

The government levies no income tax, capital gains tax or business taxes. Profits and dividends under the new laws can be remitted overseas tax-free.

The sweeping changes will also allow foreigners to own homes in Bahrain and encourage investment in a wide range of business sectors, including:

• Administrative services
• Health and social work
• Information and communications
• Manufacturing
• Mining and quarrying
• Food
• Arts, entertainment and leisure
• Water supply
• Professional, scientific and technical activities

Bahrain has a thriving financial services sector and is regarded as a regional leader for Islamic finance, banking and insurance.

Boost for Bahrain business

The new corporate laws will allow businesses to set up two new types of companies – a protected cell company (PCC) and investment limited partnerships (ILP).

Both are likely to attract interest from financial service companies as they will make structuring investments easier.

“It is hoped and anticipated that the flexibility under Bahrain law will allow continued innovation in relation to the use of PCCs. We hope that these changes boost Bahrain’s position as a financial hub,” said a spokesman for Al Tamimi and Company, a Bahraini law firm specialising in commercial consultancy.

Simplifying and opening up business ownership to outsiders is expected to make Bahrain a popular Middle East Destination for entrepreneurs.

“By inviting foreign ownership, simplifying the process of setting up a business in Bahrain and making it easier for growing businesses to become public companies, it is likely that there will be a significant and positive long-term impact on the country’s economy,” said Rupert Copeman-Hill of law firm Charles Russell Speechlys.

“Such a move is a sign that Bahrain plans to compete internationally with the free zones and enterprise hubs found in the wider region.”