VAT to Stay, Pensions and Housing to Rise in 2025–2026 Budget

The VAT rate will remain unchanged under Bahrain’s draft state budget for 2025 and 2026, which also includes an annual increase to retirees’ living allowance, employment and training opportunities for 50,000 Bahrainis each year, and a record BD800 million earmarked for housing.

These were among eight measures agreed during a joint meeting between ministers and lawmakers Saturday as both sides reviewed the draft budget.

The living allowance for pensioners, introduced in the last budget, will be maintained and increased. This was one of the first measures confirmed during the meeting.

On jobs, the government said it aims to recruit 25,000 Bahrainis each year, including 8,000 new graduates. Tamkeen will oversee training and funding programmes for an additional 50,000 Bahrainis annually.

The BD800 million housing allocation was described as the largest yet, with efforts focused on reducing waiting lists and accelerating access to homes through collaboration with private developers.

BD688 million has also been allocated to the health sector. Other plans include building new schools, refurbishing existing ones, updating curricula, and hiring more Bahraini teachers.

At least five per cent will be cut from government operating costs, and low-income Bahrainis will receive cash support if subsidised goods become more expensive during the budget period.

Several revenue-raising measures were also reviewed. These include a levy on company profits above a certain threshold, new taxes on energy drinks, sweetened soft drinks, and tobacco, as well as a carbon emissions tax for companies.

Talks were led by Parliament Speaker Ahmed Al Musallam, Shura Council Chairman Ali Al Saleh, and Finance Minister Shaikh Salman bin Khalifa Al Khalifa. The meeting followed several earlier rounds held between October and March.

Discussions also covered spending in other areas such as education, public works, social welfare, and utilities. The minister said the proposals aim to balance long-term investment with daily needs while easing pressure on public finances.