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:
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: