Bahrain Government Introduces Fiscal Reforms

January 2, 2026

Bahrain Government Introduces Fiscal 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:

Corporate Revenue Law

A new law will impose a 10% tax on profits exceeding BHD 200,000 or on companies with revenues over BHD 1 million.
This 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 encourage hiring Bahraini workers.

Reducing Administrative Expenses

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

Increasing Contributions from State-Owned Companies

Government-owned companies will contribute more to the state budget.

Selective Tax on Soft Drinks

A law will be referred to the legislature to increase selective taxes on soft drinks, promoting healthier consumption, improving public health, and optimizing healthcare resources.

Investment Land Fees

Monthly fees of BHD 0.100 per square meter will apply 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 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.
The first residential property will be excluded, and fees will be 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 work permits will rise from BHD 105 to BHD 125, monthly fees will increase from BHD 10 to BHD 30.
Healthcare fees for foreign workers will go from BHD 72 to BHD 144 over a four-year period.
Domestic workers will remain exempt.