CBAM and Bahrain

Measured against the size of its economy, Bahrain carries the heaviest Carbon Border Adjustment Mechanism exposure in the Gulf. CBAM-covered exports amount to around 2.89 percent of Bahraini GDP, and aluminium accounts for 99.2 percent of the goods in scope. Bahrain supplies roughly three percent of EU aluminium imports.

That concentration cuts both ways. A single commodity carrying almost the entire exposure means a single well-designed structure addresses almost the entire question — and Bahraini smelting has invested heavily in efficiency, which shows up favourably once verified emissions figures reach the CBAM declaration.

What the definitive phase requires

Six sectors fall within scope today: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. Article 25 of the CBAM Regulation provides that customs authorities allow the importation of CBAM goods by an authorised CBAM declarant, and that declarant purchases its certificates from the competent authority in the EU Member State where it is established. The status applies where cumulative annual imports exceed 50 tonnes of CBAM goods, with electricity and hydrogen counting from the first unit.

The first annual declaration covers calendar year 2026 and falls due by 30 September 2027. Certificate sales open on 1 February 2027 through the common central platform. Since 1 January 2026, EU import declarations carry a CBAM code in the additional reference field.

A concentrated exposure invites a focused answer

Where aluminium represents virtually all of a country's in-scope exports, the commercial question narrows to one thing: who holds the declarant status on those cargoes arriving in Europe. Selling to European buyers leaves that status, and the certificate purchase, with the buyer. Importing through an own Dutch BV brings both in-house, together with the Article 23 licence that defers import VAT on every consignment to the periodic return.

For a smelter with verified low-carbon figures, holding the declarant position also means the carbon advantage is presented by the producer rather than filtered through a distributor's pricing.

Structuring the ownership chain

Bahrain appears on the Dutch list of jurisdictions for 2026, which brings the conditional withholding tax into play on dividends, interest and royalties paid to affiliated companies. The Netherlands and Bahrain do maintain a tax treaty, and the workable answer lies in designing the shareholding chain deliberately, with treaty protection and genuine substance at the level that holds the Dutch shares.

This is a question to settle before the notarial deed is drafted rather than after the first dividend, and we map it as part of the incorporation route.

Setting up in the Netherlands

A Dutch BV is incorporated by notarial deed and registered with the Chamber of Commerce (KvK). Incorporation runs remotely by power of attorney, with the parent company holding the shares. After registration the BV obtains its VAT number and EORI number and applies for the Article 23 licence and the CBAM authorisation. The same entity then serves as your base for EPR registrations under the Packaging Regulation and for your European contracts.

Further reading: an EU entity for CBAM and fiscal representation and Article 23.

Frequently asked questions

How exposed is Bahrain to CBAM?

Bahrain carries the highest relative exposure in the Gulf: CBAM-covered exports represent around 2.89 percent of GDP, and aluminium accounts for 99.2 percent of the goods in scope. Bahrain supplies roughly three percent of EU aluminium imports.

Can a Bahraini producer hold authorised CBAM declarant status?

The status attaches to an importer established in an EU Member State, which then purchases certificates from that Member State's competent authority. A Bahraini producer reaches that position by incorporating an EU entity, for example a Dutch BV that imports in its own name.

Does the Netherlands have a tax treaty with Bahrain?

Yes, the Netherlands and Bahrain maintain a tax treaty. Bahrain also appears on the Dutch list of jurisdictions for 2026, so the conditional withholding tax on dividends, interest and royalties to affiliated companies is a factor to address when designing the ownership chain.

What does the Article 23 licence do for aluminium imports?

The Article 23 licence moves import VAT from the moment of customs clearance to the periodic VAT return, where it is declared and deducted in the same filing. On commodity volumes this releases working capital on every consignment.