Doing Business in the MENA Region – State of Qatar
Qatar is a high-income economy with the 4th highest GDP in the world backed by the world’s 3rd largest natural gas reserves and oil reserves.
The financial system in Qatar is relatively complete, fiscal expenditures can still maintain a surplus, the international balance of payments is generally stable, and sovereign debt repayment ability is not a problem.
A monarchy ruled by the Al Thani family
Arabic, however, English is widely used
Qatari Riyal (1QR = 0.21 GBP or 1 QR = 0.27 USD)
In practice, Qatar’s legal system is a mixture of civil law and sharia law. Qatar Financial Centre adopts common law principles and has its own rules and regulations.
Set up Business in Qatar
- Incorporating under Qatari Companies Law
The underlying principle is that full foreign ownership is restricted under the Qatari Foreign Investment Laws, a foreign investor may only own up to a maximum 49%. However, there are few exceptions to this rule where foreigners can apply for approval to own 100% if they are operating in certain sectors such as agriculture, health care or education.
Larger multinationals could be granted ministerial approval to operate locally through a wholly owned subsidiary.
A foreign investor may establish a local entity according. The most used vehicles is as follows:
- Branch office: The establishment of a branch by a foreign entity requires ministerial approval and often requires strict contracts with government or semi-official entities. Better to register a subsidiary instead of a branch
- A consultancy under the Qatar international engineering consultancy office (IECO), limited to engineering services only.
- If there is no trade with Qatari customers, representative office can be used.
- Setting up in the Qatar Financial Centre (QFC)
The QFC was established in 2005 as a financial and business hub with the objective of attracting international financial services providers. It is run by two authorities: a commercial authority and a regulator, the Qatar Financial Centre Authority (QFCA) and the Qatar Financial Centre Regulatory Authority (QFCRA), respectively. Entities registered under the QFC may operate internationally and in Qatar.
Entities established under the QFC can be fully owned by foreign investors. Repatriation of capital and profits is permitted with no restrictions. The QFC allows for various types of legal entities, including LLCs, general and limited partnerships and protected cell companies. All QFC entities must be licensed by the QFCA through the QFC’s Companies Registration Office.
Entities wishing to establish in the QFC must be engaged in specific activities and must obtain a license from the QFC authorities. The permitted activities fall into two categories:
- Regulated activities – activities undertaken by financial firms, such as investment and retail banking, insurance companies, funds and wealth management firms, brokerage offices and securities operations. Undertaking these activities under the QFC requires approval of the QFCRA.
- Non-regulated activities – historically, non-regulated activities encompassed activities supporting financial services, such as accounting, audit and law firms. It is worth noting that the QFC now considers applications for the registration of types of activities which are not related to the field of financial services, such activities include advertising agencies, architectural consultancies, project management, accreditation, event management, IT consultancy, environmental consulting, estate planning, to name a few.
- Free Zones:
Several Free Zones were created in Qatar starting 2005 with a view to offer global and domestic businesses opportunity to invest in the Gulf. The most prominent ones are Ras Boufontas and Um Alhoul. The Free Zones in Qatar are run by the Qatar Free Zones Authority.
- Corporate income tax taxable profit flat tax. The rate is 10%.
- Withholding tax In Qatar, corporate income tax is levied on a source basis. Therefore, if a company has a permanent establishment in Qatar or profits through activities or assets in Qatar, the company may be subject to corporate income tax.
Withholding tax is imposed on Qatar entities’ payments to non-resident entities that do not have a permanent establishment in Qatar. Corporate income tax is not levied on business entities wholly owned by Qatar residents.
- Personal Income Tax
Qatar does not impose taxes on the wages, salaries and allowances of employed individuals. Employers need to pay social security for Qatar employees insurance risk, but not for employees of other nationalities. Individual households are subject to income tax if they receive income from Qatar sources.
- Other taxes
- At present, Qatar does not impose business tax or value-added tax on enterprises
- Tariffs are imposed on goods of origin outside the GCC countries, usually at a rate of 5%, but certain types of goods are subject to higher tax rates, such as tobacco products. Temporary imports are sometimes tax-free
- Employees working in Qatar must be sponsored by the company – Foreigners may delay entering Qatar or obtaining a residence permit as many people in the waiting.
- The company shall be liable for the actions of the individual that provides the guarantee
- Employees work up to 48 hours per week (36 hours per week during Ramadan).
- Employer may apply for a probationary period of no more than six months
- Employer responsible for departure visa and flight tickets