Free Zone and Investment Incentives

Source: Bahrain International Investment Park regulations; Bahrain Logistics Zone; Economic Development Board (EDB) incentive programs

Written in plain language for general understanding. This is educational content, not legal advice. Based on Bahraini national legislation, decree-laws, and ministerial orders.

Bahraini National Law

What is this right?

Bahrain offers several free zones and investment incentives to attract foreign investment:

  • 100% foreign ownership: Bahrain allows full foreign ownership of businesses in most sectors without a local partner.
  • Free zones: The Bahrain International Investment Park (BIIP) and Bahrain Logistics Zone (BLZ) offer duty-free imports, exemption from commercial registration fees, and streamlined licensing.
  • No corporate tax: Free zone companies benefit from the same zero corporate income tax as mainland businesses.
  • Double tax treaties: Bahrain has signed double taxation agreements with many countries, providing tax relief for international businesses.
  • Tamkeen incentives: The Labour Fund offers grants for training, business development, and wage subsidies for companies hiring Bahrainis.

When does it apply?

  • You are considering setting up a business in Bahrain or a free zone.
  • You want to understand the tax and customs advantages of operating in a free zone.
  • You are an international business looking at Bahrain as a regional hub.

What should you do?

  • Contact the Economic Development Board (EDB) for guidance on investment incentives and sector-specific support.
  • Compare free zone benefits with mainland business registration — free zones may not suit all business types.
  • Check double tax treaties between Bahrain and your home country for additional tax benefits.
  • Apply for Tamkeen support if hiring Bahraini nationals.

What should you NOT do?

  • Do not assume free zone status exempts you from VAT — VAT still applies to taxable supplies.
  • Do not overlook LMRA and labour requirements — free zone companies must still comply with employment law.
  • Do not rely solely on tax incentives — consider market access, infrastructure, and talent availability.

More in Tax Rights

VAT ObligationsBahrain introduced Value Added Tax (VAT) on 1 January 2019, initially at 5%. The rate was increased to 10% on 1 January ...Read more →No Personal Income TaxBahrain does not levy any personal income tax on individuals:No tax on salaries: Bahraini nationals and expatriates do n...Read more →No Corporate Income Tax (General)Bahrain does not levy corporate income tax on most businesses:No general corporate tax: Companies operating in Bahrain a...Read more →

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Workers' RightsBahrainisation and Equal Opportunity →Consumer RightsPersonal Data Protection →
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