Bahrain or Saudi Arabia: where should your business be based?
Bahrain ranks higher in the index, 06 against =07. Which suits you depends on where the owners live, what the company is for and how it will be run.
Pillar by pillar
Doing business, side by side
Tax
Ordinary companies pay no corporate income tax. Oil and gas profits are taxed at 46%, multinational groups with revenue of EUR 750 million or more pay a 15% top-up tax from 2025, and a draft 10% tax on larger local companies is proposed from 2027.
Income tax of 20% applies to profit attributable to non-Saudi, non-GCC shareholders, and 2.5% zakat applies to the Saudi and GCC share. VAT is 15%. Qualifying regional headquarters activities pay 0% income tax and withholding tax for up to 30 years.
Set-up
Registration through Sijilat takes about 5 days, or about 14 working days with the activity licence. The fee is BHD 50 plus BHD 100 for up to three activities, with set-up costs generally under BHD 190.
A foreign investor registers with MISA, which aims to complete investment registration within 10 working days, and then obtains a Commercial Registration from the Ministry of Commerce. Since April 2025 a Commercial Registration no longer expires but the company must update and verify its data every year.
On the ground
The company needs a business address recorded with the Ministry, usually a lease or a qualifying shared office, and must keep audited accounts. There is no statutory minimum capital for a WLL.
A company needs a Saudi address and, once it employs staff, must keep a set share of Saudi nationals under the Nitaqat system run by the Ministry of Human Resources. A licensed regional headquarters must hire at least 15 full time staff within its first year, 3 of them at executive level.
Ownership
Companies must record anyone owning or controlling 10% or more with the Ministry through Sijilat and confirm the details at each annual renewal. The register is not open to the public.
Since 3 April 2025 every company files its beneficial owners, anyone holding 25% or more, with the Ministry of Commerce and reports changes within 15 days. The register is not open to the public, and fines reach SAR 500,000.
Residence
An owner of a registered Bahraini company can apply for a self sponsored investor residence permit. Golden Residency is open to property owners from BHD 130,000 and to some long serving residents and retirees.
Premium Residency offers Special Talent, Gifted, Investor, Entrepreneur and Real Estate Owner routes, plus a Limited Duration residency at SAR 100,000 a year and an Unlimited Duration residency for a one time SAR 800,000. The Investor route asks for SAR 7 million invested and 10 jobs.
Living and working
Currency
Bahraini dinar (BHD), pegged to the US dollar.
Saudi riyal (SAR), pegged at 3.75 to the US dollar.
Time zone
UTC+3 all year, with no summer time.
UTC+3 all year, with no daylight saving.
Personal tax
There is no personal income tax. Employers pay social insurance of 3% on expatriate salaries, up to a BHD 4,000 monthly ceiling.
There is no income tax on employment income. Non-Saudis who run a business in their own name pay income tax on its profit, and non-Saudi employees' employers pay 2% social insurance on wages.
Flights
Bahrain International Airport has nonstop scheduled flights to 67 destinations, including seasonal routes, across the Gulf, South Asia, Europe and East Asia.
King Khalid International Airport connected Riyadh to 113 domestic and international destinations in 2024 and handled more than 37 million passengers.
Bahrain vs Saudi Arabia: common questions
Bahrain: Ordinary companies pay no corporate income tax. Oil and gas profits are taxed at 46%, multinational groups with revenue of EUR 750 million or more pay a 15% top-up tax from 2025, and a draft 10% tax on larger local companies is proposed from 2027. Saudi Arabia: Income tax of 20% applies to profit attributable to non-Saudi, non-GCC shareholders, and 2.5% zakat applies to the Saudi and GCC share. VAT is 15%. Qualifying regional headquarters activities pay 0% income tax and withholding tax for up to 30 years.
Bahrain: Registration through Sijilat takes about 5 days, or about 14 working days with the activity licence. The fee is BHD 50 plus BHD 100 for up to three activities, with set-up costs generally under BHD 190. Saudi Arabia: A foreign investor registers with MISA, which aims to complete investment registration within 10 working days, and then obtains a Commercial Registration from the Ministry of Commerce. Since April 2025 a Commercial Registration no longer expires but the company must update and verify its data every year.
Bahrain: The company needs a business address recorded with the Ministry, usually a lease or a qualifying shared office, and must keep audited accounts. There is no statutory minimum capital for a WLL. Saudi Arabia: A company needs a Saudi address and, once it employs staff, must keep a set share of Saudi nationals under the Nitaqat system run by the Ministry of Human Resources. A licensed regional headquarters must hire at least 15 full time staff within its first year, 3 of them at executive level.
Bahrain: Companies must record anyone owning or controlling 10% or more with the Ministry through Sijilat and confirm the details at each annual renewal. The register is not open to the public. Saudi Arabia: Since 3 April 2025 every company files its beneficial owners, anyone holding 25% or more, with the Ministry of Commerce and reports changes within 15 days. The register is not open to the public, and fines reach SAR 500,000.
Bahrain: An owner of a registered Bahraini company can apply for a self sponsored investor residence permit. Golden Residency is open to property owners from BHD 130,000 and to some long serving residents and retirees. Saudi Arabia: Premium Residency offers Special Talent, Gifted, Investor, Entrepreneur and Real Estate Owner routes, plus a Limited Duration residency at SAR 100,000 a year and an Unlimited Duration residency for a one time SAR 800,000. The Investor route asks for SAR 7 million invested and 10 jobs.
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