Bahrain construction companies ‘changing CRs to avoid fee rise’
CONSTRUCTION firms in Bahrain are attempting to bypass a twenty-fold increase on an annual fee by changing their commercial registrations (CRs).
Starting from September 1, companies engaged in construction activities will have to pay BD1,000 towards the annual CR levy, a whopping increase from BD50.
Some business owners have been urging companies operating in the sector to switch their CRs from ‘construction’ to ‘building maintenance’ in order to avoid paying the increased fee, prompting the Industry, Commerce and Tourism Ministry to issue a strong warning.
Once a company changes its CR to ‘building maintenance’ it will not be entitled to engage in any construction activity, explained the ministry.
“The ministry urges businessmen and traders to ignore illegal calls urging them to switch their business activity from construction to building maintenance,” it said in a statement yesterday.
“This will not enable them to undertake work in any construction projects.
“These reports (on social media) are trying to encourage traders to switch their CR activity so they can avoid paying BD1,000 for construction activity, and get away with paying BD100 for building maintenance activity.”
The ministry said violators could face one year in jail and fines of up to BD5,000.
“We call upon traders and businessmen not to heed such calls that violate the law, and any person inciting such activities will face legal action,” it added.
However, Bahrain Contractors Society board member Abdulaziz Shamlan criticised the fee rise, saying it could have a major impact on small and medium sized companies.
He confirmed there were more than 10,000 CRs in the construction sector including small contractors – meaning the ministry will collect more than BD10 million a year through the revised fees.
“We are working while the ministry takes all the profit,” said Mr Shamlan.
“The increase in CR fees (for construction activity) from BD50 to BD1,000 will have a major impact on the sector, especially on small and medium scale contractors.
“They will also have to pay the high labour costs that include Labour Market Regulatory Authority fees, healthcare charges and other charges.”
He did acknowledge, however, that the society was aware of some businesses planning to switch their CR activity to avoid paying the increased fee from next month.
Challenge
He cautioned them against the move because it would mean the number of visas issued for foreign workers would also be reduced. “These are challenging times for businessmen who will take any measures to save costs,” he added.
In February the ministry imposed new hallmarking fees for jewellery, the GDN reported.
The new rates, issued by the Precious Metals and Gems Testing Directorate at the ministry, saw the charge for hallmarking gold rise from 30 fils per gramme to BD1 per gramme.
An additional BD2 flat fee for each analysis conducted on each item was also introduced.
