The Government of Bahrain has announced several new economic changes to help strengthen the country’s finances and support future growth. These decisions, approved by the Cabinet, focus on finding new sources of income, reducing government costs, and encouraging more efficient use of resources. The changes include plans for corporate taxes, new fees on certain services and land, and updates to work permit rules, all while aiming to protect jobs for Bahraini citizens and support the local economy.

The key initiatives include:

1. Administrative Cost Reductions

All government entities are required to cut administrative expenses by 20%, with the aim of maintaining service quality while reducing costs.

2. Increased Contributions from State-Owned Companies

Companies owned by the government will now contribute more to the state budget.

3. Corporate Revenue Law

A new corporate tax law will introduce a 10% tax on companies that earn more than BHD 200,000 in profit or have annual revenues above BHD 1 million. The tax is planned to start in 2027, once approved. Some important sectors will be exempt to protect local jobs, and companies that employ Bahraini workers will receive incentives.

4. Selective Soft Drink Tax

A legislative proposal will be sent to increase selective taxes on soft drinks. The goal is to encourage healthier consumption habits, improve public health outcomes, and better manage healthcare costs.

5. Investment Land Fees

From January 2027, undeveloped investment land that already has full infrastructure will be charged a monthly fee of BHD 0.100 per square meter. This rule applies to mixed-use properties, tourism and entertainment areas, commercial spaces, and service facilities such as schools, hospitals, and parking areas. The fee will be paid either when applying for a building permit or when the land is sold.

6. Sewerage Service Fees

New sewerage service fees will be introduced from January 2026, charged at 20% of water consumption costs, with the first residential property exempt.

7. Work Permit Fees for Foreign Workers

Starting in January 2026, work permit fees for foreign workers will gradually increase to support employment for Bahrainis. The permit issuance fee will rise from BHD 105 to BHD 125, the monthly fee from BHD 10 to BHD 30, and the healthcare fee from BHD 72 to BHD 144. These increases will be applied over four years, and domestic workers will not be affected.

To conclude, Bahrain’s recent economic reforms aim to improve financial stability and support long-term development. Measures are being introduced gradually, allowing businesses and individuals time to adjust while contributing to a more sustainable economic framework.