Banking, Money and Taxes in Bahrain
Bahrain's economy, though strong, is heavily reliant on petroleum and aluminium production, and its growth slowed down somewhat as a result of the global economic crisis.
However, Bahrain remains one of the most important centres for Islamic banking in the Middle East, and expats relocating there can look forward to dealing with banking services that are efficient and reliable.
Money in Bahrain
The currency used in Bahrain is the Bahraini Dinar (BHD), which is divided into 1,000 Fils.
Expats should be aware that Bahraini society is very much cash-based, with very few people using credit or debit cards for small purchases. The use of cheques is almost unheard of.
Banks in Bahrain
Along with the Central Bank of Bahrain, trustworthy, Sharia Law-compliant commercial banks include Ahli United Bank BSC (AUB), Bahraini Saudi Bank, Bahrain Islamic Bank, Bank of Bahrain and Kuwait, National Bank of Bahrain, Future Bank and Shamil Bank of Bahrain.
There are also a host of foreign banks with branches in Bahrain, including Arab Bank PLC, Citibank, Habib Bank, Barclays Bank, United Bank and Standard Chartered. Expats are advised to look to one of these institutions when opening a Bahraini bank account.
An alternative for expats is opening an international account for use in Bahrain through a bank in their country of origin. International accounts can be opened before arriving in Bahrain, and will provide access to a wide range of international banking services, such as high-interest savings account options and online money transfer services. Some expats report that they prefer the convenience and security of having their finances centralised in this way.
Opening hours for banks in Bahrain conform to Islamic culture and are generally between 7.30am and 2.30pm, from Sunday to Thursday.
ATMs in Bahrain
There are more than 300 ATMs in Bahrain, all of which are operated by BENEFIT (Bahrain Electronic Network for Financial Transactions).
The majority of ATMs offer 24-hour service, and customers withdrawing cash using a bank card issued by any Bahraini bank will incur no charges at the machines.
Opening a bank account in Bahrain
Expats find that opening a bank account in Bahrain is a bit more of a hassle than in other Gulf countries, as the process is stringently administered, and requires a lot of paperwork.
Expats looking to open a bank account in Bahrain must appear at the prospective bank in person, and in possession of the following documents:
- Passport, plus copies of information and visa pages
- Two passport photos
- Residency/work permit and copies
- Copy of lease/tenancy agreement, to prove residential address in Bahrain
- A 'no objection certificate' (NOC) or a 'letter of no objection' from the Bahraini employer, stating the expected monthly salary deposits they will make into the account. Often it is much easier for an expat to open an account at the same bank as their employer.
- In addition, it is highly recommended (though not necessary) to supply recent bank statements, and a letter of reference from the expat's bank in their country of origin
The three main types of bank account in Bahrain are:
- Current accounts are ideal for everyday use, and offer a full range of banking services, including an ATM card, a cheque book, Internet and telephone banking, standing orders, international transfers and monthly statements. Current accounts in Bahrain don't generally levy monthly fees, but offer account holders very little (or even zero) interest on their money
- Savings accounts in Bahrain have slightly better interest rates, but more limited access to funds. Savings accounts will come with an ATM card and the facility to make transfers and pay utility bills, and often will be promoted by banks through monthly competitions, where holders can win cash prizes
- Fixed-deposit accounts are ideal for long-term savings. These accounts offer competitive, fixed interest rates for a fixed period of time; however, account holders will have little or no access to funds until the investment has matured. A significant minimum initial deposit will be required to set up the account.
Incurring debt in BahrainWhile expats who incur debt in Bahrain are not in danger of facing jail time, as is the case in neighbouring UAE, they could be banned from travel. Furthermore, expats who have an active travel ban against them are barred from work permit or residence permit approval.
Most creditors and financial institutions cite that approaching civil courts and instituting a travel ban is a last resort, but nonetheless, expats should be aware of the situation and should avoid incurring large amounts of debt while in Bahrain.
Taxes in Bahrain
One of the great incentives for expats moving to Bahrain, is that there is no personal or income tax levied against their salary each month. All that will be deducted from the gross monthly salary is a 1% contribution to the General Organisation for Social Insurance (GOSI), which goes toward subsidising the unemployed in Bahrain.
However, before getting too excited, expats are strongly advised to research whether there exists a double taxation avoidance agreement (DTAA) between Bahrain and their country of origin. If there isn't, they will have to pay tax in their country of origin on the money they earn in Bahrain.
Expats should check whether there are any restrictions on sending money home from Bahrain to their country of origin.