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Bahrain Rental Income Guide 2026

Rental income in Bahrain is taxed at 0% for all landlords, whether individual or corporate. There is no income tax, no withholding tax on rent, and no special property income tax regime. Tenants pay a 10% municipal fee on the annual rental value.

Tax on Rental Income

0% — Bahrain does not tax rental income. Landlords receive rental payments free of any income tax. This applies to residential, commercial, and industrial property.

Municipal Fee

A municipal fee of 10% of the annual rental value is payable by the tenant. This fee is collected by the Electricity and Water Authority (EWA) as part of the monthly utility bill. For owner-occupied properties, the owner pays the municipal fee.

VAT on Rent

Residential rental is generally exempt from VAT. Commercial rental of property is subject to 10% VAT, and landlords registered for VAT must charge VAT on commercial leases and file quarterly returns.

No CGT on Property Disposal

When a rental property is sold, any gain is 0% taxed — there is no capital gains tax in Bahrain.

Deductions

Since rental income is taxed at 0%, deductions (maintenance, management fees, mortgage interest) are not relevant for tax purposes. However, landlords registered for VAT may claim input VAT recovery on property expenses for commercial properties.

Key Facts

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