Tariff & Non-Tariff Barriers

Gulf Cooperation Council integration, both economic and political, has taken on new life recently and promises to provide additional impetus to trade in coming years. Bahrain is committed to the new unified customs tariff range of 5.5 percent duty on consumer goods, 7.5 percent tariff on luxury items, and tax-free foodstuffs. The Ministry of Finance anticipates that increased volume of trade will offset the loss of USD 32 million annually created by the tariff reductions. The six Gulf states also agreed to implement a single currency by 2010. In June 2002, Bahrain unilaterally granted the possibility of dual citizenship to GCC citizens residing in Bahrain.

In January 2003, Bahrain took a step toward further GCC integration by ratifying the GCC Unified Customs Union. The agreement eliminated tariffs for GCC member states on 421 items (primarily food and medical products), and lowered to five percent its import duties on all other commodities except alcohol (125% duty) and tobacco (100% duty). Over the next three years, the GCC countries plan to implement a unified tariff standard and a single-point-of-entry system. According to the GCC Secretary General for Economic Affairs, intra-GCC trade rose from $58.6 billion in 2008 to approximately $62.9 billion in 2009, an increase of 7.35 percent. The Government made several changes to its customs duties regime to comply with the newly-established GCC Unified Customs Union. New customs classifications are as follows:

Duty Exempt    Includes 421 listed commodities, mostly food and medical products  
5 percent import duty    All other commodities, except tobacco and alcoholic beverages  
100 percent import duty    Tobacco  
125 percent import duty    Alcoholic beverages  

In principle, no tax or duty is payable on raw material imports, semi-manufactured goods to be used in manufacturing, imports required for development projects (not including spare parts), transshipments, and re-exports.

Bahrain has phased out most subsidies for export industries, but permits duty-free importation of raw materials for export products and of equipment and machinery for newly established export industries. All industries in Bahrain, including foreign-owned firms, benefit from government-subsidized utilities.

Foreign products entering or already in the GCC are dealt with as follows:

  • Goods imported to the GCC after January 1, 2003 will be granted entry if the importer presents certificates issued by the first single-entry point as a proof that his customs duties have been paid after the establishment of the customs union;

  • Goods imported to the GCC after January 1, 2003, and for which the importer fails to prove payment of customs duties after the establishment of the customs union, shall have their customs duty collected at the customs point of the country of final destination;

  • The customs declaration for statistical purposes shall be prepared manually by the owner of the goods or the person who acts on his behalf, or by computer, and shall be approved at the customs exit point and have the local invoices attached to it. Invoices are required to detail the correct value and origin of the goods;

  • The importer must ensure that the customs authority has made the necessary endorsements that justify the entry and exit of the goods on the basis of the statistical declaration.