Geography

The Kingdom of Bahrain is a tiny island state located in the Persian Gulf, off the Saudi Arabian coast. It consists of over 80 natural and artificial islands. Its population of just over 1.5 million people makes it the third least-populated country in the Asian continent.

Economy

Bahrain operates a mixed economic system with the government involved in certain industries and responsible for providing some services.

Bahrain successfully established the first post-oil dependence economy and is the fastest-growing economy in the Arab world. However, oil is still the most exported product and its sale accounts for a chunk of government revenue. 

It has a consistently rising GDP-per-capita rate which is one of the highest in the region. It is also classified as a high-income country with a very high HDI score. Due to diversification efforts, the country has a booming tourism industry with an emphasis on Islamic tradition and Bahraini heritage. 

Ease of doing business in Bahrain

According to a Wall Street Journal publication in 2011, the Bahraini economy is the freest in the Middle East and one of the top freest in the world. It also has favorable corruption and ease of doing business ratings. The Bahraini government encourages foreign direct investment by allowing total foreign ownership of industrial firms. 

It also has an efficient judicial system, with the Civil High Court which adjudicates labor disputes having an average case length time of 3 – 6 months. 

Employment Terms

Labor terms and conditions are prescribed by statutory law: the Bahraini Labour Law of 2012. The law requires employment contracts to be written in Arabic.

The average working hours are 8 hours each day and 48 hours a week. A daily working limit is set at 10 hours.

Overtime compensation in Bahrain is fixed at 25% above the normal hourly rate.

It should also be noted that working hours are to be broken up into not more than 5 hour-periods because breaks are expected to be taken at least, every 6 hours.

During special periods like the Ramadan exercise, the cap is reduced to 6 hours a day and 36 hours a week.

While the country doesn’t have a minimum wage, the average monthly salary in Bahrain is within the range of $1000 and $2,400. It should be noted that just about 50% of the population are Bahraini nationals. Therefore, the country has a large supply of foreigners, majorly from other Asian countries, seeking employment. 

Tax Information 

• All profits, dividends, and other forms of income and earnings are tax-free
• Bahrain operates on a 10% VAT. 
• Employers in Bahrain are required to pay 72 BHD per annum for every non-Bahraini worker, and 22.5 BHD per annum for every Bahraini worker to the Ministry of Health, Healthcare.
• For an employee who has completed a year of service, a minimum of thirty days of paid time off every year, accruing at the rate of two and a half days for every month of employment is necessary. Employees who haven’t worked for their firm for a full year are nonetheless entitled to leave that’s proportionate to how long they’ve been there.
• Employees who have worked for their company for three months and whose illness is documented by a doctor’s note from a government clinic or a private facility that has the employer’s approval are eligible for sick time. According to Article 65 of the Labour Law, the following sick leave entitlements must be taken in that order: (i) fifteen days of paid sick leave; (ii) twenty days of paid sick leave; and (iii) twenty days of unpaid sick leave, to be given annually.
• See the table below for other payroll tax obligations in Bahrain;

Tax	Payer	Rate
Personal Tax	Employer and Employee	0% (No tax filing)
Social Security	Local Employee	7% (Every Month)
Social Security	Local Employer	12% (Every Month)
Social Security	Foreign Employee	1% (Every Month)
Social Security	Foreign Employer	3% (Every Month)
Pension Fund	Employer	9% of employee’s gross income
Work Injury Levy	Employer	3% of employee’s gross income
Unemployment Insurance	Employee	1% of income

Why consider Bahrain as your next outpost?

Bahrain’s geographical location and tourism-focused policies mean that it would see its already wealthy population greatly increase. Its wealthy population is already an opportunity for businesses, which is why most of the biggest financial institutions have already joined the market.

However, the main attractions are the favorable policies implemented by the business-friendly government. As the country tries to further diversify its oil economy, the government has put in place several policies to create an enabling environment.

The most notable of which is the no-tax policy. The government doesn’t collect corporate or income tax from both citizens or foreigners. The only businesses that are taxed are those engaged in oil production services. 

How can WeHireGlobally help you expand into Bahrain?

If Bahrain is the next marketplace for your business, then WeHireGlobally is an important partner for you. WeHG is an international professional employment organisation (PEO), that helps companies of different sizes to expand globally with no legal risk and 100% compliance. With our established presence in Bahrain, we provide you with the best employer of record solution to hire and retain talents without setting up a physical entity in Bahrain. We add your employees to the local payroll and ensure the proper management of all their payroll tax obligations and compliance while you focus on other administrative and operational responsibilities. With WeHireGlobally, you are mitigated from all risks associated with international expansion to Bahrain as our solution provides you with 100% compliance with all financial and labor laws.