A recent report on the new Customs Affairs rule – imposing duties and 10 per cent value added tax on personal parcels valued at BD100 or more – raises an important economic question: Is this the most efficient and rational way for Bahrain to generate revenue?
Under the new rule, any shipment at or above BD100 triggers customs duties (typically around 5pc) plus 10pc VAT, along with formal clearance procedures. This means that even essential personal items – orthopaedic shoes, medical supports, nutritional supplements – now face taxation and administrative delays. For many residents, these items are not luxuries but necessities, and in many cases they are simply unavailable in Bahrain.
This policy adds friction to the economy at a time when global inflationary pressures are already squeezing households. A report in the GDN on May 22 (World News) noted that the US national debt is rising at unprecedented speed, and inflation in food and fuel continues to ripple across the world. Bahrain’s dinar is pegged to the US dollar, so these global shocks directly affect local prices. According to the Boston Herald, US food‑at‑home prices rose 2.9pc year‑on‑year in April 2026; Bahrain inevitably absorbs these pressures through imports.
In such an environment, taxing personal parcels is economically inefficient. It generates low revenue, high administrative cost, and significant inconvenience for both citizens and customs officers. Processing thousands of small parcels for a few dinars of tax each could be a textbook example of poor fiscal efficiency.
By contrast, Bahrain has a far more rational, high‑yield, low‑cost revenue source hiding in plain sight: the nearly 800,000 vehicles congesting our roads.
According to CEIC data, Bahrain had 796,959 registered vehicles in 2025. This number grows every year, placing enormous pressure on infrastructure. Billions of dinars have been spent on flyovers, tunnels, expansions and diversions – yet congestion continues to worsen.
From a fiscal perspective, the numbers speak for themselves:
If each vehicle were charged a modest BD10 annual road‑use fee, Bahrain would generate: 796,959 vehicles × BD10 = BD7,969,590 per year. Nearly BD8 million annually, without touching personal parcels or medical necessities.
If the fee were BD20, the revenue would exceed BD15.9 million per year.
Administrative cost: near zero, since vehicle registration already exists as a system.
Economic logic: road‑use fees directly fund the infrastructure they burden.
Compare this to parcel taxation –
• Thousands of small shipments
• High processing time
• Delays for citizens
• Minimal net revenue after administrative overhead
• No link between the tax and the infrastructure it supposedly supports.
Taxing personal parcels is like trying to fill a reservoir with a teaspoon. Taxing road usage is like opening a pipeline.
Furthermore, taxing vehicles aligns Bahrain with global norms. Many countries impose annual road‑use fees, congestion charges or environmental levies – not to punish drivers, but to maintain infrastructure and manage traffic responsibly.
In conclusion, Bahrain should not be taxing orthopaedic shoes, medical slippers or nutritional supplements while allowing nearly 800,000 vehicles to congest the streets without contributing a single dinar towards the roads they wear down.
A rational tax system targets the true source of infrastructure strain – not the individual ordering a BD120 pair of shoes because they cannot find them locally.
John Churchilly
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