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Sun 11 Oct 2009 08:04 AM

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Bahrain eyes tax for foreign, local investors

Tax plans for investors who set up multi million dinar businesses in the country, official says.

Bahrain is considering plans to tax both foreign and local investors who set up multi million dinar businesses in the country.

Parliament chairman Khalifa Al Dhahrani told the Gulf Daily News the aim was to increase the government’s cash flow as the nation looks to other ways apart from oil for economic growth.

The proposal will be one of several laws to be discussed by parliament, which sits for the first time on Sunday after a four-month break, the paper reported.

Initially the rule was planned for only foreign investors, but this was not in line with World Trade Organisation (WTO) rules.

"It is either the same for all, foreigners and Bahraini investors, or no one,” committee member Dr Jassim Hussain, told the paper.

"We can't discriminate when we have come a long way to attract foreign investors, who are pumping millions every year into the country's economy, alongside Bahrainis."

He told the paper it was too early to reveal any details of the proposed tax or how it would be collected.

Bahrain's Economic Development Board (EDB) refused to comment to the paper about the proposed new tax.

However, Bahrain British Business Forum chairman Khalid Al Zayani said he thought some form of taxation was inevitable.

"All the other Gulf states tax investors, so the idea that Bahrain will follow suit is not a major problem," he said. "Ultimately, we have to find ways of funding services that we have been used to getting for free,” he told the paper.

"But it is important that we remain competitive and any tax levels have to be able to compete with those elsewhere in the GCC.”

John 10 years ago

This is madness. Bahrain has zero to offer international investors and putting the word tax into the equation is tantamount to mass suicide. Bahrain has only survived by its relatively liberal legal structure, more open society and no tax. Put a tax on anything and you will see foreign investors, once they have recovered from their laughter, disappearing in their corporate dhows in their corporate droves.

Rajasekar 10 years ago

All foreign company's in bahrain already id deep trouble to overcome the recession. Currently company pay a huge amount to the government which is as follows. 1. 4% of expat Salary towards GOSI 2. 4 % of expat salary towards Training Levy 3. 10 BD per month towards workpermit levy 4. 10 - 25% of localisation cost which translates in to 25% of total expenses. Above all these if tax is levied then it is as good as not doing any business in bahrain. Is this a Investors friendly? Request the authorities to have a complete thought process before implementing any new tax burden to the investors/Companies. Rajasekar

MUKESH BHATIA 10 years ago

Already the economy is sluggish, and there is enough indirect taxation in the will be deterrent for local firms and foreign investors to put their money here! To raise funds the Govt. should adopt other means!