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Free Zone Tax Benefits

Bahrain's free zones offer customs relief — but VAT still applies.

GUIDEMarch 2026 · 6 min read

Bahrain Free Zones

Zone Customs VAT Focus
BIIP Exempt Applies Industrial / manufacturing
BIC Exempt Applies Investment companies
Bahrain Logistics Zone Suspended Applies Warehousing / logistics
Investment Gateway Varies Applies Mixed-use investment

⚠️ Critical: VAT Still Applies

Unlike UAE (where designated zones can be treated as outside-state for VAT), Bahrain free zones do not offer VAT exemptions. All free zone tenants must register for VAT if above threshold and charge VAT on taxable supplies. The benefit is customs duty exemption only.

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