Why no one is considering no reportable and still 0% tax Bahrain?

[Alenka]

The UAE has implemented 9% tax, which killed UK LLPs and US LLCs, as well as now you will be required to do a lot of paper work to keep clean records and pass audit. Without those structures processing costs will be way more higher
1. In the UAE - 5% for Stripe for each transaction
2. In the UK - 2.4% for EU and 3% for the rest of the world, including the US

There is an alternative country close to the UAE- Bahrain:
1) Still 0% tax country for everything
2) Possible to do business through US LLC and UK LLP and keep saving a lot of money on processing
3) Therefore, no requirement for any reportance or audits in Bahrain, no requirement to keep office with the personal key or hire any workers = no paper work (if we do everything through pass-through entities)

For personal life:
4) You can always fly to the UAE for 30$ for 40 minutes to spend weekends because Bahrain looks as a country without a lot of amusement
5) The cost of living is lower than in the UAE
6) It’s a better place to focus on your business without many disturbs

To get visa you should invest just 50k BHD in real estate - about 127k USD, property is quite big and good at the first look, which can be later sold out. May be you lose 10k USD, but it’s same Freezone price in the UAE.


Of course, Bahrain isn’t the place to live the whole life, but it looks good for 1-2-3 years with all that pluses, what do you think about it, why people don’t go there?

 

[void]

why people don’t go there?

they are not that desperate yet to voluntarily live in a desert with muslims?

 

[12345]

they are not that desperate yet to voluntarily live in a desert with muslims?

but it's quite rich (by GDP) and cilized country, people here consider Bulgaria or Romania so they might as well check Bahrain

 

[void]

but it's quite rich (by GDP)

any mafia (ehm... government) can get rich by letting foreign companies using foreign technologies to dig and plunder the land it occupies

what technology, know-how or anything with value for your life comes from Bahrain?

 

[Sols]

To a lot of people, there is more to life than not paying tax.

IIRC, Bahrain has far fewer and more difficult paths to immigration than UAE. You need to invest something like 100,000 BHD (over 250,000 EUR/USD) to get the kind of visa that UAE hands out for far less. And this is one of those times in life where paying more doesn't actually get you anything better, other than a lower tax burden. Living in Bahrain as a wealthy foreigner (especially one not from the Gulf region) is not as popular as in Dubai.

Success begets success. Because Dubai has a large community of business people and is a key financial centre in the region, more people go there for that reason, which in turn strengthens Dubai's position. In many cases, there is more value in meeting with the right people and paying 9% than paying zero and struggling to make connections.

 

[Mr Eros]

A lot of expats live in Bahrain. Mostly they are emloyees of oil industry companies from nearby KSA. Expats choose to live in Bahrain and work in KSA (go there by car every day) because of less strict daily life limitations and booze is also available in Bah unlike KSA.

Broadly speaking, there are more options available than just UAE and Bah. Qatar and Oman offer the same. If booze is not a concern for you, then you can look more deep into tax laws of those countries.

 

[JohnLocke]

Of course, Bahrain isn’t the place to live the whole life, but it looks good for 1-2-3 years with all that pluses, what do you think about it, why people don’t go there?

For some people it may indeed be an option but, I believe, we speak entrepreneurs in the age of 20 - 25 without family.

 

[backpacker]

From a personal perspective -> Bahrain Residency By Investment - 130k USD Real Estate

 

[Alenka]

any mafia (ehm... government) can get rich by letting foreign companies using foreign technologies to dig and plunder the land it occupies

what technology, know-how or anything with value for your life comes from Bahrain?

There are many countries that doesn’t bring anything innovative but people keep residing there.

About Muslims in the desert - the UAE is the same, but if you like UAE lifestyle you can easily fly there each weekend, it’s relatively cheap and quick.

To a lot of people, there is more to life than not paying tax.

IIRC, Bahrain has far fewer and more difficult paths to immigration than UAE. You need to invest something like 100,000 BHD (over 250,000 EUR/USD) to get the kind of visa that UAE hands out for far less. And this is one of those times in life where paying more doesn't actually get you anything better, other than a lower tax burden. Living in Bahrain as a wealthy foreigner (especially one not from the Gulf region) is not as popular as in Dubai.

Success begets success. Because Dubai has a large community of business people and is a key financial centre in the region, more people go there for that reason, which in turn strengthens Dubai's position. In many cases, there is more value in meeting with the right people and paying 9% than paying zero and struggling to make connections.

Just around 130k USD in real estate, which is refundable by selling it later.

Of course, not for everyone, but I’m surprised no one even considering that good country with high level of life, all the other counties have already implemented taxes in Gulf and Bahrain is the only one with still zero taxes.

Please, pay attention that 9% tax - isn’t the whole taxes you actually must pay, it doesn’t include:
1. Freezone license cost - which is about 10k USD for solid Freezone
2. 2% from Revenue (not from profit!) because it US LLC gives 3% for processing, and UAE entity via Stripe asks for at least 5% for processing. Usually, profit is about 10% from revenue, so that it’s actually 20% from profit
3. Reporting, accounting, passing audits - that’s all requires a lot of money, if you have solid business B2C business, just ask how much would accountant charge for 20k transactions accounting on the monthly basis, I was shocked
4. Your time for all that pain - you need to manage all that accounting, auditing, everything else, at least find right people, for many of entrepreneurials the hour of work cost more than 200$, how many hours you must spend on it yearly?

So that it looks like just good marketing from Dubai, rather than the real market value, comparing UAE and Bahrain, just my opinion, of course.

 

[Konstanz]

Why do you need to pay 9% corporate tax if LLP member can be for example freezone company?

 

[Fred]

Bahrain is not streamlined at all - I did the process already by myself and for one client who had several passports and wanted diversification.

The intention was basically everything what @Alenka mentioned here - this was at least the initial thinking.

It turned out that things are not streamlined at all - we didn't went with the Residence Visa through Real Estate Investment but with a Freezone Company Formation getting Employee Residence Visas through the own formed Company.

This is what we actually do in Dubai and wanted to re-build in Bahrain.

And here it all starts:
1. You need to make an application to get approval from the Free Zone - you must prove that your Freezone Company will serve the Bahrain Economy
2. You need to demonstrate after 1 year that the company actually really have some activity - again Activity which benefits the local Bahrain Economy
3. You need to hire local Bahrain nationals within 5 years of existence

You can work yourself through with a good skilled lawyer but then still:
1. Paid-up capital requirement of 50.000 USD
2. Annual submitted accounts / financial audits to the Freezone
3. Office Rental required within the Fee Zone and not part of the Freezone License

Company Formation with legal costs (the whole process is unworkable without a local lawyer in our opinion) :
Initial: ca. 20.000 USD
Yearly: ca. 10.000 USD
Incorporation Time: ca. 3 Months

Banking: Was easy as we had in both case used UAE Banks with Branch in Bahrain so we had just to mention some kind of Business Expansion to Bahrain. All in all very old school thinking - very old school business models you look at.

Like mentioned earlier here - things are not streamlined at all and you can feel this the whole process - if you are used to work in the UAE you are just going crazy as everything takes forever.

All in all no competition at all to what the UAE does with there Freezone Industry - we couldn't figuered out during the whole process if they can't or they simply don't want to compete with what the UAE is actually doing.
For us it felt like they are not interested in entertaining you at all if can't bring some benefit to the Economy in Bahrain which is a paradoxon within the definition of an international Freezone Company.

Maybe someone had better experience with the 130.000 USD Realt Estate Investment route.

Refering back to @Alenka the real value in the current Dubai Company Formation is the regulation and the financial system access it has.

Disregarded pass-through US LCC's can disappear over night should Fintechs like Mercury get ever issues - UK LLP's like mentioned here can only be used with EMI's as well.

Beside of that only islands available with islands banking which is not relibale at all.

The value of a tax free company is still not to underestimate - which you still get in Dubai if structured in the right way.

 

[cyprustoomuch]

I was thinking about Bahrain too. It doesnt look too terrible and has indeed some advantages.

The population of around 1.7M should be big enough to find some skilled employees that could work for you there, living there may not be necessary. I think its kind of a struggle to actually build substance in a country like seychelles, IOM or Guernsey when you consider how little people actually live there.

Offices are cheap, indian employees there are cheap too, but setting up a company seems quite expensive at the beginning. As I have seen it they also dont want to be part of that fancy global minimum tax group. So probably they will keep the 0% for quite some time.

Maybe someone could recommend a better 0% tax country with some decent population where you could easily build a "team".

 

[Konstanz]

I was thinking about Bahrain too. It doesnt look too terrible and has indeed some advantages.

The population of around 1.7M should be big enough to find some skilled employees that could work for you there, living there may not be necessary. I think its kind of a struggle to actually build substance in a country like seychelles, IOM or Guernsey when you consider how little people actually live there.

Offices are cheap, indian employees there are cheap too, but setting up a company seems quite expensive at the beginning. As I have seen it they also dont want to be part of that fancy global minimum tax group. So probably they will keep the 0% for quite some time.

Maybe someone could recommend a better 0% tax country with some decent population where you could easily build a "team".

It depends on your activity and your personal residence situation.
For some business, BVI without substance works fine. For some business you need special licenses etc

 

[cyprustoomuch]

It depends on your activity and your personal residence situation.
For some business, BVI without substance works fine. For some business you need special licenses etc

Can you recommend any high quality european (apart from monaco etc) country where a BVI without substance is enough?

 

[Konstanz]

Can you recommend any high quality european (apart from monaco etc) country where a BVI without substance is enough?

You have to live in tax free country yourself for bvi to work. There is no real workarounds besides being tax free yourself.
There is no tax free options in Europe apart expensive options as Swiss (lump sum), Monaco, Andorra residencies.
You can look at UAE it's cheaper option or some islands or Panama

 

[Alenka]

Why do you need to pay 9% corporate tax if LLP member can be for example freezone company?

UK LLP can't benefit from Freezone status of UAE company

 

[Konstanz]

UK LLP can't benefit from Freezone status of UAE company

Under what law?

 

[cyprustoomuch]

You have to live in tax free country yourself for bvi to work. There is no real workarounds besides being tax free yourself.
There is no tax free options in Europe apart expensive options as Swiss (lump sum), Monaco, Andorra residencies.
You can look at UAE it's cheaper option or some islands or Panama

Explain me please how andorra is tax free. They have a 10% corporate tax that can be avoided by using an offshore company but income will be taxed at 10% too.

Andorra is also a very good choice in europe.

 

[Konstanz]

Explain me please how andorra is tax free. They have a 10% corporate tax that can be avoided by using an offshore company but income will be taxed at 10% too.

Andorra is also a very good choice in europe.

Andorra is not totally tax free (you can work with BVI tax free as Andorra dont have CFC rulings etc., but you still have to pay 10% for personal income or reside up to 183 days as passive resident, then you dont pay 10%), as Switzerland is not tax free (you still have to pay lump tax which is very high)
Monaco is the only 0% income tax country in Europe

 

[Alenka]

Under what law?

How can UK LLP (UK entity) be a UAE Freezone (which means it's UAE Freezone entity)?