The Kingdom of Bahrain is located in the Middle East, a small island of 765.3 km² east of Saudi Arabia. Bahrain is known for its Business-friendly environment and exceptional lifestyle. Since Bahrain has ZERO corporate or income tax, Bahrain’s economy mainly relies on petroleum exports. 

In 2019, Bahrain introduced VAT at 5%, which was increased to 10% in 2022. Bahrain serves as a hub for entrepreneurs and investors seeking a gateway to the Gulf region. Known for its strategic location, business-friendly environment, and supportive government policies, Bahrain presents numerous opportunities for businesses of all sizes. 

Whether you’re an aspiring entrepreneur or a multinational corporation, Bahrain is the perfect destination to start or expand your business.

Steps to Start a Business in Bahrain

To start a Business in Bahrain, a person has to obtain a Commercial Registration (CR). A CR allows the investor to practice commercial business activities. The following are the steps  to start a business in Bahrain in 2026:

Step# 1: Choose the Business Activity

Step# 2: Choose the Business Name

Step# 3: Find a Suitable Business Location

Step# 4: Find an Experienced Consultant

Step# 1. Choose the Business Activity

The first step in starting a business in Bahrain is to check the eligibility criteria for practicing a specific business activity. To determine the right legal structure for your business, you may need professional business structure consultation. The Kingdom of Bahrain has classified its business activities into the following 7 categories:

• Allowed up to 100% for Foreigners
• Allowed up to 100% for GCC Nationals
• Allowed up to 100% for Americans
• Allowed up to 100% for Singaporeans
• Allowed up to 100% for Icelander, Liechtensteiner, Norwegian, Swiss
• Foreign ownership equal to or less than 49%
• Foreign ownership allowed, but must include a Bahraini shareholder

Depending on your nationality, you must verify your eligibility before starting a business in Bahrain. If you require a Bahraini partner, we can help you find a suitable one.

Step# 2: Choose a Unique Name for Your Business

The second step is to choose a unique name for your business. As per “Law No. (18) of 2012 with respect to trade names,” the following are the rules for choosing a proper business name:

✓ The business name can be a person’s name.

✓ The business name can be a part of a person’s name.

✓ The business name can be innovative.

✓ The business name can be a combination of those mentioned above.

✓ The business name may include the description of the business activity.

✓ The name must be unique and must not have been registered already. It must not be similar to an existing business.

✖ The name should not consist of a common word only. Such as a Mechanical Workshop, Hospital, School, etc.

✖ It must not contradict the undertaken business activities.

✖ It must not contradict local laws & values.

✖ It should not be the same as an internationally known company.

✖ It should not reflect any religious, political, or military affiliations.

✖ It should not be similar to any honorary name, emblem, or social organization.

✖ It should not be a translation or imitation of reputable marks, brands, or third parties.

Step# 3. Find a Suitable Business Location

The third step is finding a suitable location for your business. We classify the business locations’ requirements in the following categories:

• Administrative office
• Retail Shops
• Workshop
• Factory

Suppose you require an administrative office that does not display your products. In that case, you can choose between an Incubation Centre, a Business Centre, or a Private Office at the desired location.

Suppose you require an administrative office that does not display your products. In that case, you can choose between an Incubation Centre, a Business Centre, or a Private Office at the desired location. Like many other countries, Bahrain has areas renowned for their production of specific goods or services. 

Workshops & Factories have requirements specified by the relevant ministries and authorities. You should consult us before choosing a space for your workshop or factory. Indeed, finding the ideal location for a new business can be a daunting task, especially when trying to align with the company’s nature. 

Step# 4. Find an Experienced Consultant

To start a business in Bahrain, you require a Professional Body that is an authorized service provider in Bahrain and competent to provide you with the following services:

• Consultation in choosing a business activity, business name, and location.
• Security Clearance of all shareholders
• Swift Bank Account opening
• Investor, employee, and family resident permit processing with expert guidance.
• Compliance Guidance.
• Continuous support.

Choosing an authorized service provider for starting a business in Bahrain is crucial for several reasons. Firstly, compliance with local laws and regulations is paramount, and authorized providers are well-versed in the legal landscape of Bahrain, ensuring that your business adheres to all statutory requirements. 

Secondly, they offer reliability and trustworthiness, which are essential when dealing with sensitive business information and financial transactions. Thirdly, authorized providers have established networks and relationships that can facilitate smoother business operations, from banking to obtaining necessary permits. 

They can provide valuable local insights and market intelligence that can be instrumental in making strategic business decisions. Ultimately, partnering with an authorized service provider can lead to a more efficient, secure, and prosperous business setup process in Bahrain.

10 Reasons to Start a Business in Bahrain

Starting a business in Bahrain offers numerous benefits, making it an ideal destination for entrepreneurs and investors. Below are the top 10 reasons to establish your business in Bahrain:

1. Strong Currency
2. Strategic Location
3. 100% Foreign Ownership
4. No Geographical Restrictions
5. Forward-thinking Government
6. Exceptional Lifestyle
7. Talented Human Capital
8. Conducive Business Environment
9. Business Support Programs
10. Advanced Banking System

1. Strong Currency

Setup business in Bahrain with the world’s 2nd strongest currency, the Bahraini Dinar. 1 Bahraini Dinar equals 2.65 United States Dollar, making it the world’s 2nd strongest currency. This means that by investing in Bahrain, you will not have to worry about the depreciation of your money.

2. Strategic Location

Invest in Bahrain and connect to the $2 trillion GCC market: Bahrain is the natural gateway to the Gulf, with particularly favorable access to Saudi Arabia, the region’s single largest market and economy.

3. 100% Foreign Ownership

Unlike most Gulf countries, Bahrain allows 100% business ownership to foreign investors. There are 375 types of businesses that foreigners can own 100% without a local sponsor in Bahrain. This distinct policy provides you with freedom of choice and investment security. Below is a table showing the number of business activities allowed for 100% foreign ownership.

100% Business Ownership

4. No Geographical Restrictions

Bahrain does not believe in the zones. Unlike other countries in the region, Bahrain has no geographical restrictions for businesses. No matter what your nationality is, you can open your business at any suitable location. Therefore, you can target any market in Bahrain!

5. Forward-thinking Government

With a track record of pioneering reforms under its belt, enacting the most business reforms of any country in 2019, according to The World Bank, Bahrain continues to move forward with policies and reforms that empower businesses and industries to establish themselves and grow.

6. Exceptional Lifestyle

Bahrain ranks first globally for work-life balance and first in the MENA region for personal happiness. It is highly regarded for its job opportunities, career satisfaction rates, and its friendly culture, noted for being the world’s second-easiest place to settle in.

7. Talented Human Capital

Access MENA’s top talent: Bahrainis join the workforce with both an exceptional array of skills and extremely high levels of motivation, achieving The World Bank’s highest scores in MENA for human capital development

8. Conducive Business Environment

Bahrain’s government collaborates closely with businesses and regulators to explore opportunities that enhance the country’s business environment and foster optimal commercial conditions. This collaboration has seen Bahrain take solid steps towards introducing initiatives that create an enabling and innovative ecosystem, allowing businesses to thrive.

9. Business Support Programs

Every year, the Government of Bahrain launches multi-billion-dollar support programs for startups and businesses in Bahrain. For the first two years, you can avail of 50% Govt Support for Audit, Accounting services, and many other services for your startup.

10. Advanced Banking System

The Kingdom of Bahrain has a robust financial system, comprising over 362 financial institutions, including 87 Banks (as of June 2022). There are multiple payment gateway service providers offering reliable online payment solutions.

Do’s and Don’ts while Starting a Business in Bahrain

If you plan to start a business in Bahrain, always choose a professional consultant to help you register your company legally. To avoid fraud, verify the consulting firm’s reputation. If you have two options to choose from, always choose the legitimate one over the economic one. We suggest the following Do’s and Don’ts to start a business in Bahrain:

Do’s

✓ Conduct a Feasibility Analysis

✓ Leverage PRO services in Bahrain to streamline your government-related paperwork and approvals for company formation in Bahrain.

✓ Sign the engagement letter with your consultant

Dont’s

✕ Don’t pay 100% in advance to your consultant

✕ Don’t choose the local agents if you are a non-resident

✕ Avoid Commercial Concealment

How to Start Online Business in Bahrain?

Starting an online business in Bahrain is very easy. The government has empowered online companies with an incredible eCommerce portal, www.mall.bh. Foreigners can begin online business services without the need for a local partner. However, Trade-related companies require a local partner. The following is the procedure to establish an online business in Bahrain:

• Choose a suitable business activity
• Choose a unique business name
• Get an office solution at an incubation center
• Obtain Commercial Registration
• Register your business at the mall.bh

The following are the business ideas for an online business in Bahrain:

• Social Media Marketing
• Management Consultancy
• Life Coach
• Accounting Consultancy
• Web Development
• SEO Services
• Yoga
• SEO Services

Choose PI Startup Advisory For Your Business Registration

Starting a business in the Kingdom of Bahrain has been streamlined thanks to the comprehensive services provided by the PI Startup Advisory team.

Our expertise in company formation and commercial business registration ensures entrepreneurs can navigate the process with ease, allowing them to focus on other critical aspects of their business. This support is crucial in a country where a Commercial Registration certificate is a fundamental requirement for business operations.

Simply get in touch with us. Our consultants will discuss all the details and advise you on the organizational structure best suited to your business goals.

FAQs

Conclusion

Bahrain offers exceptional opportunities for entrepreneurs seeking sustainable business growth. The kingdom offers zero corporate tax and benefits from a strong currency. Foreign investors enjoy 100% ownership rights in numerous business activities. Government support programs and advanced banking systems enhance business success. 

The kingdom’s business-friendly policies consistently attract global investors and entrepreneurs. An exceptional lifestyle and a talented workforce create ideal business operating conditions. Professional consultation ensures smooth registration and compliance with local regulations. Contact PI Startup Advisory today for expert business registration services. Our experienced consultants will guide you through every single step. Begin your successful business journey in Bahrain with us today.