Bahrain Payroll 2025–2026: SIO Contributions & LMRA Fees—Complete Employer Guide

If you employ staff in Bahrain, two statutory costs define your payroll compliance: Social Insurance Organization (SIO) contributions for Bahraini nationals and Labour Market Regulatory Authority (LMRA) fees for expatriate workers. In 2025, employer SIO rates increased again under a multi-year schedule, while LMRA continued to collect monthly levies and work-permit charges.

This practical guide explains what to pay, when to pay it, and how to configure your systems so you don’t overpay or trigger penalties during audits.

1. Snapshot: What changed in 2025?

• Employer SIO contribution (Bahraini nationals) rose to 17% in 2025; the employee share remains 8%. The total for nationals is 25% of insurable pay (up to the salary ceiling).
• Authorities have confirmed the annual 1% employer step-up each January through 2028—budget now.
• Expatriate employees are outside the Bahraini pension scheme; they contribute 1% to unemployment insurance and employers contribute 3%.
• LMRA fees and work-permit charges remain due—budget for permit issuance/renewal and monthly levies.

2. SIO Contributions—Rates, Base, and Ceiling

2.1 Who is covered?

• Bahraini nationals (private sector): full SIO pension + unemployment insurance.
• Expatriates: not in the pension system; only unemployment insurance applies (3% employer, 1% employee).

2.2 Current rates (2025)

Employee Type	Employer	Employee	Total
Bahraini national	17%	8%	25%
Expatriate employee	3%	1%	4%

Note: Employer rates for nationals are scheduled to increase by 1% each January until 2028. Plan multi-year budgets accordingly.

2.3 Salary ceiling & wage updates

Contributions apply to insurable pay up to the official ceiling. Keep wages up to date in government systems; use the Wages Update eService and follow the permitted change ranges.

3. LMRA Fees—Permits, Monthly Levies, and Payments

Bahrain’s LMRA manages the work-permit lifecycle and collects fees and monthly levies for expatriate workers.

3.1 Work-permit fees (illustrative)

Typical fees for new/renewed permits are BD 86 (6 months), BD 172 (1 year), or BD 344 (2 years). Additional administrative/service fees can apply depending on the transaction.

3.2 Monthly levies & payment rules

Employers must budget for monthly levies for each registered worker and settle them on time to keep permits valid.

3.3 Where to manage everything

Use the LMRA employer portal to issue/renew permits, view due fees, and verify worker status.

4. Building a 2025–2026 Payroll Budget (Worked Example)

Scenario: 10 employees—6 expatriates at BD 700 each; 4 Bahraini nationals at BD 900 each.

1. SIO for nationals
• Employer: 17% × (4 × 900 × 12) = BD 7,344/year
• Employee: 8% × (4 × 900 × 12) = BD 3,456/year (deducted from pay)


2. Unemployment insurance for expatriates
   • Employer: 3% × (6 × 700 × 12) = BD 1,512/year
   • Employee: 1% × (6 × 700 × 12) = BD 504/year
   
   
3. LMRA permits (1-year renewals)
   • 6 permits × BD 172 = BD 1,032
   • Add the monthly LMRA levies from the portal schedule.

Total employer statutory cost (ex-levies): BD 7,344 + 1,512 + 1,032 = BD 9,888. Then add your monthly levy total for a complete budget.

5. Payroll Process—What to Configure in Your System

1. Create separate contribution groups
• Bahraini nationals: SIO-Pension 17% (ER), 8% (EE).
• Expatriates: Unemployment Insurance 3% (ER), 1% (EE).


2. Implement a salary-ceiling rule for nationals to stop contributions above the cap; schedule an annual wage-data refresh.
3. Map LMRA costs
   • Set permit fees as employer-paid benefits.
   • Track monthly levy as a recurring liability and reconcile to LMRA statements.


4. Calendar your statutory dates
   • Permit expiry reminders at T-60 / T-30 / T-7 days.
   • Payroll cut-off to ensure deductions & employer contributions post with the salary run.


5. Portal reconciliation
   • Each month, reconcile payroll to the LMRA portal balances and file paid-fees confirmations in your audit folder.

6. Payroll Process—What to Configure in Your System

Mistake	Why It Hurts	Fix
Applying national SIO rates to expatriates	Overpays 17% ER/8% EE by mistake	Use a distinct expat profile: 3% ER / 1% EE only.
Ignoring annual employer rate step-ups	Budgets short; arrears in January	Refresh rates every January through 2028.
Missing LMRA monthly levies	Permit suspension & fines	Set standing orders; reconcile monthly to portal balances.
No wage-data refresh	SIO mismatch at audit	Use the Wages Update eService; follow change-range rules.

7. 2025–2026 Action Plan (Four Steps)

1. Rate Refresh: Confirm SIO rates in your payroll engine (17%/8% nationals; 3%/1% expats) and pre-load the 2026 bump.
2. Ceiling & Data: Enforce the salary ceiling; clean employee profiles (nationality, permit number, SIO number).
3. LMRA Calendar: Audit permits and set auto-payments for monthly levies; earmark renewal fees (BD 172 per standard 1-year permit).
4. Audit Pack: Archive portal receipts, SIO/LMRA statements, and a reconciliation sheet every month.

8. How INDGenius Accounting Helps

• Bahrain payroll setup & rate governance—we implement and monitor SIO/LMRA changes so you never miss a bump.
• Permit & levy reconciliation—monthly tie-outs to LMRA portal with an audit-ready folder.
• Budgeting & forecasts—multi-year projections reflecting employer step-ups to 2028.

Want a 15-minute payroll check-up? We’ll review your current settings and send a fix list the same day.