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Bahrain - Banking
When you’re handling cash in a country where more than half the population have settled from abroad, it’s important to recognise notes quickly. Otherwise, you run the risk of being handed foreign currency, forgeries or old notes which are no longer legal.
The Central Bank of Bahrain has a very useful picture gallery showing the current valid notes in circulation.
Cashpoints are easily found in urban areas, with many operating 24 hours day. The ATM network is operated by BENEFIT (Bahrain Electronic Network for Financial Transactions). If you have a bank card from a local bank account, you can withdraw your cash for free.
Retail Banks In Bahrain
Bahrain has a thriving banking sector. If you are looking for a bank offering current and savings accounts, online banking services and English-speaking staff, you’ll have plenty of choice on offer.
The major local banks in Bahrain include the National Bank of Bahrain, the Bank of Bahrain and Kuwait as well as the Al Ahli United Bank. If you already have accounts at Citibank, HSBC, Standard Chartered, BNP Paribas or any of the other international banks operating in Bahrain, you may find it easier to ask them to set you up with the appropriate account.
There may be some delay in transferring funds between bank accounts, so if getting paid quickly is your priority, try to open your account with the bank your employer uses.
Bank Branch Opening Hours
From Sunday to Thursday, bank branches in Bahrain open at 7.30 or 8am. They close at lunchtime, typically from 1pm until 4pm, although they sometimes stay open until 2.30pm. Banks then open again in the late afternoon, completing all customer transactions by 6 or 6.30pm. All branches close for the entire day on Friday.
Some branches in less populated areas may have shorter opening hours. You can usually find this information listed in both English and Arabic for each branch on the bank’s website.
Opening A Bank Account
Even if you start your account application online, you’ll have to be interviewed and have your original documents inspected in person to complete the process. Take care to bring every piece of evidence required, otherwise the process will be delayed.
You must present your passport to prove your identity. You will also need to provide two passport-style colour photos for the bank’s use, along with a photocopy of the passport pages. The bank must check you have the legal right to live in Bahrain as well as a valid work permit if you are employed. You may be asked for copies of these documents.
Your tenancy agreement will be inspected to confirm you have a valid address in Bahrain.
The bank needs to check you are financially sound and your income is from legal, legitimate sources. If you are working, you must provide the ‘no objection certificate’ from your employer, which states your salary and the amount expected to be paid into your bank account each month. If you are retiring in Bahrain, you should provide official proof of the amount and source of all regular deposits.
You may be asked to show your three most recent bank statements in your home country, so take these just in case. If you use online banking rather than receiving paper statements, print them yourself, but be prepared for additional questions.
Depending on your circumstances, you may be asked for a reference from your previous bank. Ask your bank manager for this before you set off to Bahrain.
If your spouse or accompanying child wants to set up a bank account in their own name, they will have to undergo a similar process. In addition, you will have to provide permission for them to do this.
You may have to transfer money from overseas into a local Bahraini account or, more likely, transfer monies you have earned in Bahrain to family back home. Either way, shopping around for the best foreign exchange money transfer rates can help keep costs down.
Will Hewitson, Senior Partnerships Manager at FC Exchange, has been interviewed for one of the Expat Focus podcasts. It’s well worth your time listening to his advice, as he explains the ways to get a great rate on currency transfers as well as how to move your money abroad with confidence.
You can get a foreign exchange money transfer quote with ExpatFocus – quickly and for free – thanks to our work with a number of international partners.
The Cost Of Living In Bahrain
Most people living and working in Bahrain maintain that they earn a larger disposable income and have a higher standard of living that they did in their home countries.
The cost of living in Bahrain has risen in recent years and is higher than in many of the neighbouring countries. In particular, rental costs in desirable areas can be expensive, and many goods have to be imported into the country. The costs of medical insurance and private education can also be high.
However, the low tax regime means Western expats may see a significant rise in their take-home earnings. The job security, opportunities for wage growth and career progression, work-life balance and disposable income generally experienced in Bahrain mean the country was listed in the top five destinations of the HSBC Global Expat Survey. It’s a location that many people work in now to accumulate savings for the future.
Taxation In Bahrain
Bahrain is noted for its low rates of personal taxation as well as the absence of capital gains or inheritance taxes. For those expats also receiving free or subsidised accommodation as part of their employment package, working in Bahrain can be financially rewarding.
However, if your home country has no double taxation avoidance agreement in place with Bahrain, you may be liable to pay taxes on your earnings in Bahrain back home. There are a number of factors that come into play to determine your liability, and the services of a tax specialist will help enormously.
Oliver Heslop, the owner of GETS, is based in the UK and regularly contributes to the ExpatFocus podcasts on tax affairs. Digital nomads may be interested to hear his advice about the tax implications of working abroad.
Oliver suggests that the tax advantages for workers in the Middle East are sometimes offset by the social cost that women endure through restricted freedoms. Luckily, women in Bahrain are not oppressed to the extent that many of the surrounding societies demand.
If you’re interested in learning about the taxation regime in Bahrain, including VAT, property taxes and the implications of sending large or regular sums of money home, you can find out more in the Taxation section of this country guide.
Retirement In Bahrain
The authorities in Bahrain actively encourage applications for long term residency from wealthy people living on investments and pensions. In return, a low tax regime, year-round sunshine and good quality of life are on offer.
You can find out more about this topic in the Retiring and Pensions section of this country guide, and in the detailed article How to Live in Bahrain after you've Retired.
Social Security And Welfare
As a migrant worker in Bahrain, you’ll pay very few taxes beyond the one per cent of your salary for General Organisation for Social Insurance (GOSI) payments to support unemployed people, plus property taxes based on the value of your residence. However, in return, you’ll have very little access to the country’s social security and welfare systems. These are essentially funded by corporate taxes, meaning they are tightly restricted.
Even before you receive a visa to move to Bahrain, you will have to prove that you can and will be financially independent of the state throughout your residency. Should you have a serious accident or illness and suddenly find yourself unable to work, or if something happens to your retirement funds and you no longer have an adequate income to support yourself, you will be expected to return to your home country.
Getting Financial Advice Before You Go
Moving to the unfamiliar tax regime of a new country can be daunting. If you are leaving behind a home, savings and family, it quickly becomes a complicated situation in which it can be easy to make a costly mistake. Everything from double taxation treaties, inheritance tax rules and even working out if you have a good enough cash flow to see you through an emergency all take time to investigate and prepare for.
We strongly recommend you seek specialist financial advice before heading abroad so you know all your affairs are in order and avoid receiving a huge tax bill you can’t pay.
US citizens may be interested to know that ExpatFocus works with Tom Zachystal, a Chartered Financial Analyst and Certified Financial Planner. With more than 10 years’ expat portfolio management and financial planning experience, Tom has clients on four continents in over a dozen countries.
His services include, but are not limited to, US or offshore investment accounts, IRAs, 401ks, portfolio/investment management, UK SIPPs, retirement planning and other financial planning services for US citizens living abroad or residents of any nationality living in the US.
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