HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

Bahrain’s liberal tax regime, 100 per cent foreign ownership of businesses, highly skilled workforce and excellent infrastructure have proven attractive to companies looking for a gateway to the Middle East; in 2017 the country attracted a record 71 companies with investments of USD733 million. However, it is oil on which its economy almost exclusively relies (oil accounts for approximately 86 per cent of the country’s budget revenues), which given the prolonged period of weak oil prices has placed it under significant strain. The country’s fiscal deficit is forecast at 11.9 per cent of GDP in 2017. Real GDP grew 3.4 per cent in Q4 2017 (a fall of 2.8 per cent on Q3), with the oil sector expanding 1.3 per cent year on year. The IMF forecasts GDP growth of 2.3 per cent for 2017, compared to 3 per cent in 2016, and 1.6 per cent in 2018. More robust figures of 3.1 per cent in 2017 and above 3 per cent for 2018 and 2019 have been released by the Bahrain Economic Development Board. Growth in non-oil sectors (particularly in sectors such as hotels and restaurants and the financial services) has remained resilient however. The pace of growth for the non-oil sector reached 4.8 per cent in the first nine months of 2017, and is expected to exceed the 4 per cent growth recorded in 2016 (the non-oil sector grew 3.8 per cent in Q4). The government has taken steps to address its public finances, increasing fuel and utility prices, for example, but has postponed implementing fresh austerity measures, including the introduction of a 5 per cent VAT, to cut its budget deficit until a system to compensate citizens for a higher cost of living has been agreed upon. The discovery in April 2018, of an offshore field estimated to hold more than 80 billion barrels of shale oil and between ten and 20 trillion cubic feet of deep gas reserves, has the potential to substantially changes in the country’s financial fortunes.

To read the detailed report, please click on the Download PDF option

Legal and regulatory

  • Foreign exchange accounts can be held by residents both domestically and abroad. Resident domestic currency (BHD) accounts cannot be held abroad, but are freely convertible
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts are freely convertible

To read the detailed report, please click on the Download PDF option

Taxation

  • Bahrain does not operate a general corporation tax system, electing only to tax the income of oil companies
  • There is no corporate tax for most companies
  • A tax rate of 46 per cent applies to the profits of oil companies
  • VAT is expected to come into force as from 1 October 2018 at a standard rate of 5 per cent and a registration threshold of approximately USD100,000

To read the detailed report, please click on the Download PDF option

Payment instruments and systems

  • Cash is used for low-value retail transactions. Cheques are commonly used for both commercial and retail payments, although electronic credit transfers are increasingly used for high-value and low-value corporate transactions. Payment card use is rising. A National Mobile Electronic Wallet (BenefitPay) was launched in July 2017. The wallet enables instant payments via smartphone
  • Bahrain operates three national payment systems: an RTGS system, the BCTS for cheque payments, and the EFTS for low-value electronic transactions. The EFTS comprises three subsystems: Fawri+, Fawri and Fawateer, an EBPP system

To read the detailed report, please click on the Download PDF option

Cash management

  • Domestic and cross-border notional pooling and cash concentration is permitted between resident and non-resident companies
  • Cash and cheque collection services are available

To read the detailed report, please click on the Download PDF option

Electronic banking

  • Electronic banking is commonplace in Bahrain. There is no bank-independent electronic banking standard
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail purposes. BENEFIT provides a shared internet banking platform for banks
  • The Bahrain e-Government portal facilitates the payment of government fees and services online via debit and credit cards

To read the detailed report, please click on the Download PDF option

 

 


To read the full report on Bahrain and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.

Sources:

  • International Monetary Fund
  • The World Bank
  • Bahrain Economic Development Board

The materials contained on this page were assembled in May 2017 (unless otherwise dated).

 

Disclaimer

This document has been produced by HSBC Bank plc and members of the HSBC Group (“HSBC”), together with their third-party contributor, WWCP Limited. We make no representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities arising under or in connection with the use of, or any reliance on, this document or the information contained within it. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The information contained in this document has not been independently verified by HSBC.

This document contains information relating to third parties. The information does not constitute any form of endorsement by these third parties of the products and/or services provided by HSBC or any form of cooperation between HSBC and the respective third parties.

Under no circumstances will HSBC or the third-party contributor be liable for (i) the accuracy or sufficiency of this document or of any information, statement, assumption or projection contained in this document or any other written or oral information provided in connection with the same, or (ii) any loss or damage (whether direct, indirect, consequential or other) arising out of reliance upon this document and the information contained within it.

HSBC and the third-party contributor do not undertake, and are under no obligation, to provide any additional information, to update this document, to correct any inaccuracies or to remedy any errors or omissions.

No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC and the third-party contributor. Any products or services to be provided by HSBC in connection with the information contained in this document shall be subject to the terms of separate legally binding documentation and nothing in this document constitutes an offer to provide any products or services.