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FOCUS: BAHRAIN<br />
Malta Business Review<br />
New rules providing 100% foreign<br />
ownership will boost investment in<br />
Bahrain<br />
By Nabil Khoury<br />
The Kingdom of Bahrain is in the<br />
process of making comprehensive<br />
changes to its corporate laws and<br />
procedures to make it easier to set up<br />
and carry out business in Bahrain. The<br />
changes will allow for easier company<br />
incorporations, the streamlining of the<br />
company administration process and the<br />
easing of restrictions on foreign ownership.<br />
A series of new laws and amendments<br />
have been introduced over the last 24<br />
months to modernise and streamline the<br />
regulatory regime, enhance corporate<br />
governance and increase accountability,<br />
empower shareholders and facilitate<br />
foreign participation in Bahrain companies.<br />
They are designed to promote enterprise in<br />
Bahrain and encourage foreign investors to<br />
choose Bahrain as a destination of choice<br />
for doing business in the Middle East.<br />
The Bahrain cabinet has further<br />
announced that it is to allow 100% foreign<br />
ownership in residency, real estate,<br />
administrative services, health and social<br />
work, information and communications,<br />
manufacturing, mining and quarrying,<br />
food, arts, entertainment and leisure, water<br />
supplying and professional, scientific and<br />
technical activities.<br />
Business opportunities in Bahrain are set<br />
to increase heavily in the period leading<br />
up to the new the Ministry of Industry and<br />
Commerce (MOIC) regulations, which for<br />
the first time puts Bahrain on a competitive<br />
footing with some of the region’s mega<br />
free zones and business hubs. The nature<br />
and size of the proposed business, as well<br />
as the particular requirements of investors,<br />
will govern the choice of legal structure in<br />
Bahrain. All types of Bahraini companies<br />
give the shareholders or the directors an<br />
Investor’s Residence Visa.<br />
Bahrain imposes no exchange control<br />
restrictions on repatriation of capital,<br />
profits and dividends, enabling full financial<br />
transferability of capital, profits and<br />
dividends. Bahrain currently levies no taxes<br />
on personal or corporate income. There is no<br />
capital gains tax, no withholding tax and VAT.<br />
Bahrain currently levies no<br />
taxes on personal or corporate<br />
income. There is no capital<br />
gains tax, no withholding tax<br />
and VAT<br />
Forming a company in Bahrain offers<br />
excellent access to the GCC states,<br />
especially Saudi Arabia, which is the<br />
largest market in the region. Bahrain has<br />
an expanding treaty network that includes<br />
over 30 double tax agreements with key<br />
partners in Asia, Europe and the Americas,<br />
as well as the Middle East and Africa. This<br />
is supplemented by bilateral investment<br />
treaties with countries including India, Italy<br />
and the US, and Free Trade Agreements<br />
with trading partners such as the US and<br />
Singapore.<br />
Potential investors should speak to a<br />
consultant to ensure that the company they<br />
are establishing complies with the various<br />
new MOIC rules and regulations. Sovereign<br />
is in a unique position, through its global<br />
network of offices, to give guidance on<br />
suitable structures available to meet any<br />
personal and business requirements.<br />
The Bahrain property market is already<br />
highly competitive when compared to<br />
other regional locations due to its attractive<br />
residential and commercial rents and<br />
values, but the huge monetary investment<br />
into the city and its infrastructure<br />
combined with the new opportunities for<br />
foreign investment will certainly help to<br />
support sustained activity in the long term.<br />
Given the boost to real estate values<br />
and rents in Bahrain, property owners<br />
should be ensuring that their ownership<br />
structures and succession plans are fit<br />
for purpose. Many property owners<br />
are not fully conversant with local legal<br />
procedures or taxes and may not fully<br />
recognise the longer-term implications<br />
in terms of potential exposures to capital<br />
gains tax, inheritance tax or forced heirship<br />
rules. Substantial benefits may be derived<br />
through the use of corporate, trust or<br />
foundation structures to address these<br />
issues.<br />
Sovereign assists many of its clients with<br />
the acquisition of real estate worldwide.<br />
We advise on tax and structuring and<br />
can manage the transaction process and<br />
financing arrangements. With our regional<br />
knowledge of property ownership laws and<br />
regulations, along with our tax planning<br />
expertise, we can help you reduce any<br />
potential exposure. <strong>MBR</strong><br />
EDITOR’S<br />
Note<br />
Nabil Khoury is the<br />
Managing Director,<br />
Sovereign Trust<br />
Consultancy (Bahrain)<br />
WLL<br />
wwww.mbrpublications.net<br />
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