Bahrain EOSI & 10% VAT Calculator: Law No. 36/2012 & SIO Accruals

Direct Legal Rule: Under Bahrain Labour Law No. 36/2012 (Article 116), End of Service Indemnity accrues at 15 days' wage per year for the first 3 years, and 30 days (1 full month) per year for year 4 onwards. Includes toggle for Bahrain 10% standard VAT invoice calculation.
Bahrain Calculation Controls

Statutory EOSI engine paired with 10% Bahrain standard VAT utility.

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Basic + Fixed Allowances
BHD
100 BHD 2,000 BHD 4,000+ BHD
Years
0 to 11 months
Bahrain EOSI Accrual
BHD 0.000

Pursuant to Article 116 (Law No. 36/2012)

Daily Wage (Monthly / 30): 0.000 BHD
Years 1–3 Accrual (15 days/yr): 0.000 BHD
Year 4+ Accrual (30 days/yr): 0.000 BHD
Statutory Guarantee: SIO Expat Fund Protected

Bahrain Labour Law No. 36 of 2012: End of Service Indemnity (Article 116)

In the Kingdom of Bahrain, terminal indemnities for non-Bahraini workers not covered by local statutory pension schemes are codified under Article 116 of Law No. 36 of 2012. Under this statute, the employee is entitled upon termination of employment to end-of-service indemnity computed on the basis of their final drawn monthly wage.

The Statutory Accrual Tiers

Bahrain indemnity follows a two-stage sliding scale based on the duration of uninterrupted service:

Bahrain EOSI Statutory Formula (Article 116)
Tier 1 (Years 1–3) = (Monthly Wage / 30) × 15 × Years (Max 3)
Tier 2 (Years 4+) = (Monthly Wage / 30) × 30 × (Total Years - 3)
Total EOSI = Tier 1 + Tier 2

The 2024 SIO Expatriate Fund Transformation

Historically, employers in Bahrain accrued EOSI provisions internally on their balance sheets, leaving expatriate workers exposed to non-payment if a firm faced insolvency. Under recent Social Insurance Organisation (SIO) directives, private sector employers must now deposit mandatory monthly indemnity contributions directly into the central SIO account, insulating expatriates against corporate default.

Completed Service Duration Statutory Days Accrued Payable on 1,000 BHD Monthly Wage
1 Year 15 Days 500.000 BHD
3 Years 45 Days 1,500.000 BHD
5 Years 105 Days (45 + 60) 3,500.000 BHD
10 Years 255 Days (45 + 210) 8,500.000 BHD

Bahrain 10% Standard Value Added Tax (VAT)

Effective January 1, 2022, Bahrain doubled its standard VAT rate from 5% to 10% under Decree-Law No. 33 of 2021. For business transactions and consultancy invoices, our integrated engine computes both VAT addition (Exclusive base × 1.10) and VAT extraction (Inclusive gross / 1.10) with exact 3-decimal fils precision.

Frequently Asked Questions: Bahrain EOSI & 10% VAT

How is Bahrain End of Service Indemnity (EOSI) calculated under Article 116?
Under Article 116 of Bahrain Law No. 36 of 2012, indemnity is calculated at 15 days wage per year for the first three years of continuous service, and one full month wage (30 days) for each subsequent year based on the worker's final wage.
What are the 2024 Bahrain SIO changes for expatriate indemnity?
Under Ministerial Decision No. 109 of 2023, employers must deposit monthly EOSI contributions directly into the Social Insurance Organisation (SIO) fund (4.2% of wage for years 1 to 3, and 8.4% thereafter), guaranteeing terminal payouts upon departure.
What is the standard VAT rate in the Kingdom of Bahrain?
The standard VAT rate in Bahrain is 10%, implemented on January 1, 2022 pursuant to Decree-Law No. 33 of 2021 amending Decree-Law No. 48 of 2018, doubling the previous 5% rate on standard taxable commercial goods and services.
Does an employee forfeit Bahrain indemnity if they resign?
No, under Bahrain Law No. 36 of 2012, non-Bahraini expatriate employees who complete at least one year of continuous service are entitled to their statutory end-of-service indemnity upon resignation, provided compliant contractual notice was served.
How does the SIO direct deposit fund protect expatriates against employer insolvency?
Because monthly indemnity contributions reside in an independent state-backed sovereign fund rather than company balance sheets, expatriate severance funds are fully insulated from commercial insolvency, enterprise bankruptcy, or corporate liquidation.

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