Government Introduces Corporate Tax, Land Fees, and Work Permit Reforms

The Government of Bahrain has announced a series of initiatives aimed at improving the country’s financial situation while ensuring continued support for citizens. The measures, approved by the Cabinet, focus on optimizing government spending, increasing revenue, and promoting sustainable economic growth.

The initiatives include:

Reducing Administrative Expenses: All government entities will cut administrative costs by 20% while maintaining the quality of services provided to citizens.

Increasing State-Owned Company Contributions: Government-owned companies will contribute more to the state budget.

Corporate Revenue Law: A new law will impose a 10% tax on profits exceeding BHD 200,000 or companies with revenues over BHD 1 million. The law aims to diversify income sources and is expected to be applied in 2027 after legislative approval. To protect local employment, key sectors affecting national jobs will be exempt, and incentives will be provided to encourage hiring Bahraini workers.

Selective Tax on Soft Drinks: A law will be referred to the legislature to increase selective taxes on soft drinks, encouraging healthier consumption habits, improving public health, and optimizing healthcare resources.

The government expressed gratitude to legislative representatives for their constructive discussions, which helped enrich the planning and review of these initiatives.

Other measures include:

Investment Land Fees: Monthly fees of BHD 0.100 per square meter will be applied to undeveloped investment lands with full infrastructure services starting January 2027. The categories include mixed-use buildings, tourism and entertainment areas (hotels, resorts, restaurants, cafés), commercial zones (malls, showrooms, commercial blocks), and service areas (education, healthcare, sports, fuel stations, parking). Fees will be collected either when applying for a building permit or when selling the property.

Sewerage Service Fees: To maintain infrastructure sustainability, new sewerage fees will be introduced in January 2026, excluding the first residential property, at 20% of water consumption costs.

Work Permit Fees for Foreigners: To prioritize Bahraini employment, work permit fees will gradually increase starting January 2026. The fee for issuing permits will rise from BHD 105 to BHD 125, monthly fees from BHD 10 to BHD 30, and healthcare fees for foreign workers from BHD 72 to BHD 144, over a four-year period. Domestic workers will be exempt.

The government emphasized that these measures complement ongoing programs to train and employ Bahraini nationals, reinforcing their priority in the labor market.