DOING BUSINESS IN QATAR - PWC
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This publication is a joint project with Doing business in Qatar
Contents Disclaimer
Issued by HSBC Bank Middle
East Limited, P.O. Box 57, Doha,
Qatar (the Bank), a member of
Executive summary 4 the HSBC Group of companies.
Regulated by the Jersey Financial
Foreword 6 Services Commission. Licensed
and regulated by the Qatar
Central Bank.
Introduction – Doing business in Qatar 8
This document is not intended as
Conducting business in Qatar 14
an offer or solicitation for business
to anyone in any jurisdiction. It
Taxation in Qatar 20 is not intended for distribution
to anyone located in or resident
Audit and accountancy 24 in jurisdictions which restrict the
distribution of this document. It
Human Resources and Employment Law 26 shall not be copied, reproduced,
transmitted or further distributed
Trade 28 by any recipient.
Banking in Qatar 29 The information contained in
this document is of a general
HSBC in Qatar 30 nature only. It is not meant to
be comprehensive and does not
Country overview 32 constitute financial, legal, tax or
other professional advice. You
Contacts 34 should not act upon the information
contained in this publication without
obtaining specific professional
advice. This document is produced
by the Bank together with
PricewaterhouseCoopers (‘PwC’).
Whilst every care has been taken
in preparing this document,
neither the Bank nor PwC makes
any guarantee, representation or
warranty (express or implied) as
to its accuracy or completeness,
and under no circumstances will
the Bank or PwC be liable for any
loss caused by reliance on any
opinion or statement made in this
document. Except as specifically
indicated, the expressions of
opinion are those of the Bank and/
or PwC only and are subject to
change without notice.
The materials contained in this
publication were assembled in
December 2012 and were based on
the law enforceable and information
available at that time.
Executive summary
• Qatar has one of the • A new tax law has been 3. Commercialregistration
fastest-growing economies introduced, the main requirements.
in the world. provisions of which are
a corporate income tax 4. Taxation
– the corporate
• In April 2011 HH Sheikh of 10% and the introduction income tax rate is 10%.
Hamad bin Khalifa Al-Thani of withholding taxes.
and the Heir Apparent, Sheikh (Different tax rules apply 5. Recruitmentrequirements
Tamim bin Hamad bin Khalifa in the QFC and the QSTP). and processes/visas.
Al-Thani launched the National
Development Strategy 2011- • There is an audit requirement 6. There are no income taxes
2016. The strategy will for most companies in Qatar. for expatriate employees.
pave the way for Qatar’s Financial reporting is based
economic, social, cultural on IFRS. 7. Property restrictions.
and environmental
development, leading to an • Qatar is a member of the Gulf 8. The local culture and customs.
even more prosperous Qatar Co-operation Council along
and setting the pace for future with Kuwait, Bahrain, Saudi 9. Theclose links between
national strategies to come. Arabia, Oman and the UAE. Qatar and the other Gulf
Co-operation Council (GCC)
• It is an exciting time to do • Qatar is a small country but countries.
business in Qatar due to has a growing population and
the opportunities created has many cash-rich individuals 10. Themassive infrastructure
by massive public and and companies. developments that will
private investment in be made in the lead up
non-hydrocarbon sectors. to the FIFA World Cup
10 key points for foreign 2022 and significant
• There are a variety of corporate investors to consider: investments in downstream
structures available for oil and gas industries.
investors setting up business 1. Robust
Foreign
in Qatar, including establishing Investment policies.
a corporate entity in the Qatar
Financial Centre (QFC) 2. The
appropriate business
or in the Qatar Science structure for their activities.
& Technology Park (QSTP).
4
Foreword
Qatar has achieved A country with the third-largest Abdul Hakeem Mostafawi
unprecedented economic proven Natural Gas reserves Chief Executive Officer
growth, outpacing regional in the world, Qatar is investing HSBC Bank Middle East Limited
and other global emerging in its potential and future. Qatar
markets including the BRIC Under the visionary leadership
countries. It is well-known of HH Sheikh Hamad bin
as one of the richest countries Khalifa Al Thani and his consort,
in the world with an average HH. Sheikha Moza bint
GDP per capita income Nasser, the developments
in excess of US$75,000 in the health sector, education,
per annum. infrastructure, science and
technology have impacted
Qatar is one of the few the progress and growth
countries in the world that remarkably.
weathered the global financial
storm of 2008 with great At HSBC, we are ideally
success and received an positioned to help corporates
upgraded sovereign rating and individuals with cross-
to AA by S&P in 2010. The border banking needs. Our
projected boost in budget global connectivity extends
spending of 25% for the to 87 countries and territories
fiscal year 2010-2011 resulted around the world. Our
in higher outlay for major extensive local knowledge
infrastructure projects as combined with global
well as investments in the expertise can help corporates
education and health sectors. and individuals in achieving
The announcement that their goals.
Qatar will be host to the FIFA
World Cup 2022 has renewed HSBC has three branches in
confidence in strong economic Qatar. A complete financial
growth for the country over service provider that offers
the next decade. the best in corporate
and personal financial
services worldwide, HSBC
is the preferred partner
for the internationally-
minded customer.
6
Introduction
Doing business in Qatar
Economic environment from 2002 was accompanied Fig. 2. Inflation, end of year consumer prices (%)
by relatively high inflation 20
Qatar has one of the fastest- which reached a peak of over
growing economies in the 15% in 2008. However, in the 15
Year end inflation rate (%)
world. The real terms GDP following year the slowdown
of Qatar increased by 17% in growth and a fall in property 10
in 2010 and by 19% in 2011 prices (due to a combination
according to the IMF’s World of a decline in demand and an 5
Economic Outlook (WEO) of increase in supply) contributed
April 2012. Oil and gas remains to deflation. Inflation for future 0
the most significant sector periods is expected to average
and in 2010 Qatar became 4% per annum. -5
the world’s largest liquefied
natural gas (LNG) producer. -10
Fig. 1. Gross Domestic Product at Constant Prices, 2000-2009
01
08
00
09
02
03
However, there has also been
04
06
05
07
20
20
20
20
20
20
20
20
20
20
increasing investment in other 500
Inflation
Qatari Riyals billions (2004 prices)
sectors such as financial 450
services, health and education. 400 Source: IMF, World Economic Outlook Database
350
Qatar now has amongst the
300
highest GDP per capita in the Diversification of Economy and WTA tennis tournaments
world. According to the WEO 250 and a European PGA Tour golf
database, the GDP per capita in 200 In recent years the event. In January 2011, Qatar
Qatar in 2011 was US$98,330. 150 Government’s economic policy hosted the AFC Asian Cup
The GDP based on purchasing- 100 has focused on developing at which the best international
power-parity per capita, which 50
Qatar’s non-associated natural football teams from Asia
takes into account relative gas reserves and increasing competed. The most significant
0
costs of goods and services in private and foreign investment development came in early
00
09
01
03
02
04
10
13
15
12
14
07
08
11
06
05
countries, was US$102,943. in non-energy sectors such December 2010 when FIFA
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
GDP in constant prices GDP forecast in constant prices as financial services, health, announced that Qatar had
Economic growth is set education, sport and business- been chosen to host the 2022
Source: IMF, World Economic Outlook Database
to continue with the WEO related tourism. It has set Football World Cup.
forecasting increases in GDP up the Qatar Financial Centre
from 2012-2017. The actual (on which more details are Qatar’s first National
and forecast real GDP growth provided below) to attract Development Strategy (NDS),
figures from 2006-2017 financial services entities 2011-2016 was launched in
are shown in figure 1. to locate in Qatar. It has also April 2011 that will identify
promoted Qatar as a high- priorities and direction for
The award of the 2022 FIFA end tourist destination through Qatar, serving the broader
World Cup to Qatar has brought investment in infrastructure ambitions of the Qatar National
forward planned long-term and through staging high- Vision 2030 through specific
infrastructure development profile sporting events. Qatar set actions and targets. The
and will lead to many additional hosted the Asian Games in government plans more than
large investment projects. December 2006 and it hosts US$65 billion in infrastructure
The rapid economic growth annual events such as ATP spending through 2016.
8
Under the umbrella of the Qatar Business environment efficiently. QE went into a • An extensive and increasing Qatar Investment Authority
Foundation large investments partnership with NYSE in 2010 range of air links to international (QIA) has also opened
have been made into education In the World Bank’s report whereby NYSE obtained a 20% destinations through Qatar opportunities through acquiring
(Education City), science and ‘Doing Business 2012’, which stake in QE. This enables QE Airways. significant stakes in companies
technology (QSTP), Qatar covers the period from June to provide a world-class trading such as Volkswagen/Porsche,
Computing Research Institute 2010 through May 2011, Qatar platform for its investors. • The opportunity for foreign Hochtief and Harrods. QIA
(QCRI), Qatar National Research is ranked 36th (out of 183 investors to have 100% has state-backed investment
Fund (QNRF) and health economies) for ease of doing Population and workforce ownership of companies clout that will continue to grow
(Sidra research hospital). business. Starting a business (in the Qatar Financial Centre, opportunities in the future.
in Qatar now also requires the Qatar’s population has more in the Qatar Science and
Why it is a good place registration for taxes as well than doubled in the last eight Technology Park and for Barriers, risks or downsides
to do business as obtaining a company seal. years, increasing from 744,029 certain specific industries if they for foreign investors
These new procedures were in 2004 to 1,759,227 as of are outside the specified zones).
The continued growth in the introduced in 2010. 31 January 2012 according to The most significant barriers or
economy, together with the the Qatar Statistics Authority • No income tax on salaried risks for foreign investors are:
investment by the government A study from the World Bank, (QSA). This increase has largely employees.
as part of its efforts to diversify PwC and IFC titled ‘Paying come through immigration • The requirement that Qataris
the economy, mean that Taxes 2011’ ranked Qatar of expatriate workers and • Relatively few restrictions hold 51% or more of the
there will be many business second in the world for ease it remains a relatively easy on recruitment of staff capital in companies established
opportunities in Qatar in future of paying taxes. This was based location to which overseas from overseas. in Qatar. (There are various
years. Whilst governments on the cost of taxes and the employees can relocate. exceptions to this which are
and major private sector bodies administrative burden of tax • No foreign exchange controls outlined in the next section,
are seeking to cut back on compliance for a medium-size Incentives for or restrictions on the remittance ‘Conducting business in Qatar.’);
expenditure in other parts case study company in 2009. foreign investors of funds overseas.
of the world, in Qatar there • Qatar has a relatively new
are large ongoing investment Qatar also has relatively low Qatar has many positive • A low corporate income tax intellectual property (IP) regime;
projects, with more on the way. levels of corruption amongst features to attract foreign rate of 10%.
Qatar also has many cash-rich public officials – in Transparency investors: • Prices in the rental market in
individuals and firms looking for International’s 2011 Corruption In 2010, FDI inflows in Qatar Qatar are high compared to
projects to invest in overseas. Perceptions Index, Qatar scored • Well-equipped and resourced fell by 32 per cent as the last other countries in the region;
7.2 out of 10 on a scale where hospitals and medical facilities. of four LNG Qatargas plants,
The awarding of the 2022 10 was ‘highly clean’ and 1 was that had bolstered FDI in • The Qatari Riyal is pegged to
football World Cup to Qatar ‘highly corrupt.’ This meant it • International Schools providing 2009, was completed. Qatar the US Dollar at an exchange
accelerated and extended was ranked 22nd out of 182 the British, American and remains the second-largest rate of US$ = QR3.64;
investment plans. Qatar is countries. Arabic is the official French Curricula as well as recipient country of foreign
expected to spend up to language of Qatar, but English International Baccalaureate. direct investment in the region.
US$150bn on infrastructure is widely spoken, particularly in
projects over the next 5-6 business circles. • Access to international The presence of large
years. These major projects universities (Texas A and M, international companies such
include the New Doha Qatar Exchange, regulated by Carnegie Mellon, Georgetown as Exxon, Total, Shell, IBM and
International Airport, New Qatar Financial Market Authority, University, VCU-Q, Weill Cornell, many more is a clear indication
Doha Port, Qatar Railways supports Qatar’s economy North-Western University) for of the benefits of setting up
Project, Lusail, and the by giving investors a platform expatriate students. operations in Qatar.
Qatar-Bahrain Causeway. through which they can trade
• A strong telecommunications
sector.
10
• Expatriate employees may show that the countries relationship with your
take some time to adjust that Qatar imported from business contacts and
to living in Qatar. Whilst the most were the USA deliver on any promises
English is widely spoken, (11.8% of all imports), China you make as it is still a
the language of government (9.0%) and Japan (7.5%). relatively small place, so
remains Arabic. Qatar is a your business reputation
Muslim country so the brewing • Qatar has a sovereign wealth is of key importance.
of alcohol is prohibited and fund, Qatar Investment
the importation and sale of Authority (QIA), which is
it is strictly regulated, as is seeking to invest in a range of
the importation and sale of sectors throughout the world.
pork products. There are also
restrictions on the importation • The UNCTAD World
and use of narcotics and on Investment Report 2011
the possession of materials showed that Foreign Direct
considered obscene. Investment (FDI) in Qatar in
2010 totalled US$5.5 billion.
Key markets and trade
Business etiquette
• Qatar is heavily dependent on
imports but is a net exporter of Great emphasis is placed on
goods and services due to its networking and exchanging
oil and gas reserves. business cards (giving and
In 2010, the total value of receiving them with your
imports to Qatar was US$21 right hand) is important.
billion whereas the total value Punctuality at meetings is
of exports from Qatar was expected. The dress code
US$75 billion. Hydrocarbon is suits for men, and ladies
exports (crude oil, LNG should cover elbows and
(Liquefied Natural Gas) and knees. Handshaking when
associated products) accounted meeting business contacts
for over 85% of this total. is common but when
According to the QSA, the meeting Arab people of the
largest export markets for opposite sex it is courteous
Qatar in 2010 were Japan to wait for them to initiate a
(29.4% of total exports), handshake, as they do not
South Korea (16.5%), and always wish to do so.
India (8.7%). The import In Qatar it is important
figures from QSA for 2010 to maintain an ongoing
12
Conducting business in Qatar
Forms of business
The Foreign Investment Law services, distribution services, options available for a foreign
2000 provides that the Ministry exploitation and development investor wishing to conduct
of Finance, Economy and Trade of natural resources, energy or business in Qatar are as follows:
may authorise foreign investors mining sectors; and
to own 100% of a company’s 1. Incorporate a local entity under
capital where: • The project is compatible with the Commercial Companies
Qatar’s development plan. Law (Law No.5 of 2002)
• The entity operates in the as amended by Law No.16
agriculture industry, healthcare, The authorisation is not of 2006. Details of the types
education industry, tourism, IT, automatic, being given on a of entities are shown in the
technical consultations, cultural, case-by-case basis. Where the table below:
sport and entertainment authorisation is not granted, the
Type of Foreign ownership Minimum capital
Description limit
Company (unless otherwise approved)
requirement
Simple Limited Formed by two or more natural 49% of capital N/A
Partnership persons who are personally and
jointly responsible for the liabilities
of the entity.
General/Joint An entity formed by Joint Partners 49% of capital N/A
Partnership (jointly and personally liable for the
debts of the company) and Trustee
Partners (shareholding partners
whose liability is limited to the value
of shares held in the capital).
Limited An entity formed by one or more 49% of capital ≥ QR1 million,
Partnership Joint Partners (personally liable for divided into shares
with Shares the debts of the company) and four or of equal value that
more Trustee Partners (shareholding are transferable
partners whose liability is limited to and indivisible and
the value of shares held in the capital). should be fully paid
on incorporation
Unincorporated An unincorporated entity. If any of the 49% of capital N/A
Joint Venture partners of a JV are non-Qataris then
(JV) the company will only be permitted to
carry out business activities stipulated
by law for non-Qataris.
Table continued on page 16
14
The government of Qatar 3. Incorporate a local entity in the •S
ervice licence – issued to
Type of Foreign ownership Minimum capital
Description established a financial centre, Qatar Science and Technology entities providing services to
Company limit requirement
the QFC, in 2005, mainly aimed Park (QSTP) QSTP tenants. The holder of
Limited Liability Formed by at least two partners, 49% of capital ≥QR200,000 at regulated organisations this licence is not entitled to
Company (LLC) whose liabilities are limited to the operating in the financial The QSTP is a location for any free-zone benefits.
value of the shares held in the services sector. However, entities engaged in research
company. The shares of an LLC are the QFC law permits certain and development activities. 4. Establish a branch
other non-regulated activities It was established to provide
not freely transferable.
to be carried out such as a home for technology-based A foreign entity engaged in
Public Capital is divided into shares of ≥QR10 million acting as a holding company companies from around a project in Qatar is permitted
Shareholding equal value. Should have a minimum or providing group treasury the world and to generate to establish a branch. A branch
Company of five shareholders. The liability of functions. Entities can be opportunities for Qatar’s usually exists only for the
based at premises anywhere in scientists and entrepreneurs. duration of the associated
shareholders is limited to the nominal
Qatar (provided those premises project or contract and ceases
value of the shares to which
are approved by QFC). QFC The QSTP is a ‘free zone’ to exist once the relevant
they subscribe. entities can conduct business meaning that QSTP entities project is completed. It is
internationally and can be 100% are fully exempt from Qatar sometimes possible to extend
One Person A company in which every economic N/A ≥QR200,000
foreign owned. Full repatriation tax in respect to their licensed the duration of the branch
Company activity and its full share capital is held
of profits and capital is activities, can have 100% to accommodate further
by one natural or corporate person. permitted for QFC entities. foreign ownership and can contracts, but this requires the
trade directly in Qatar without a further approval of the relevant
Holding A joint stock, limited liability or one Depends ≥QR10 million Permitted activities in local agent. Another benefit is ministry and this process can
Company person company financially and the QFC are: that the rent of the premises in sometimes prove difficult.
administratively controlling one or the QSTP are subsidised. A branch is therefore not
more other companies by holding •R
egulated activities – activities usually an appropriate structure
at least 51% of the shares of undertaken by financial firms QSTP entities must be for a business model envisaging
such companies. (such as investment and retail physically located in the QSTP activity over a number of years
banks, insurance companies, and can only perform activities and contracts.
fund and wealth management specified in their licence. There
firms, brokerage offices are three types of licence: 5. Establish
a Representative
Limited Liability otherwise specifically approved. should reflect the contribution and securities operations). Trade Office (RTO)
Company (LLC) Such an approval is only granted of the respective parties in Pre-authorisation by the QFC •S
tandard licence – issued
to projects that are strategically operating the business and Regulatory Authority is required to entities that incorporate A ministerial decision in 2006
The LLC is the type of company
significant to Qatar. reflect a ‘real partnership’. for these. in the free zone as a QSTP allowed foreign entities to set
most commonly chosen by In some cases this could LLC or register as a branch up RTOs in Qatar with 100%
foreign investors. However, Although the foreign mean that the profit allocation •N
on-regulated activities – office. The QSTP LLC must foreign ownership.
a LLC may not engage in the shareholding in a LLC is to foreign shareholders is in activities in support of have at least two shareholders
business of insurance, banking, restricted, the profit share excess of 90%. A foreign financial firms (e.g. services and a minimum capital of A RTO is essentially a structure
or in the investment of funds. attributed to the foreign shareholder is also permitted by accounting, audit and QR200,000. Entities with the to establish a ‘shop window’
shareholding may be in to appoint the management legal firms). No QFC standard licence are entitled in Qatar – a RTO of a foreign
LLC requires by law the
A excess of the legal shareholding. and have control of the LLC. Regulatory Authority to all free-zone benefits; company is not allowed to
participation of one or more There is no official guidance authorisation is required. undertake contractual business
Qatari nationals (either on the maximum percentage 2. Incorporate
a local entity •R
estricted licence – issued to in Qatar but it can be used to
individuals or body corporate) share which a foreign with the Qatar Financial An outline of the QFC tax entities that do not qualify for market services and products
with the foreign shareholding shareholder can receive, Centre (QFC) regime is provided in the the standard licence. Entities in Qatar.
restricted to 49% unless however, the agreed share corporate tax section below. with this licence have limited
16 free-zone benefits; and
Setting up a business such as shareholders, corporate authorisation by the Regulatory may receive approval to set
registration documents are Authority to conduct up a branch in the absence
The Commercial Registration required. Provided these Regulated Activities. of any government or
requirements for each of matters are resolved promptly, quasi-government contract.
the business structures are it is usually possible to set up The Regulatory Authority
as follows: a LLC in approximately aims to process all applications Such approvals will typically
4-6 weeks. within three months of receipt take approximately 4-6 weeks
1. Incorporate
a local entity of the completed form. to obtain, provided all the
under the Commercial 2. Qatar Financial Centre (QFC) required documents have
Companies Law (Law 3. QSTP been submitted to the Ministry.
No.5 of 2002) e.g. LLC Provided an entity is carrying
out a permitted QFC activity, The process to set up in the 5. Representative Trade office
he requirements that must
T the process to set up in the QSTP and the compliance (RTO)
be met when setting up a QFC is either: requirements are as follows:
LLC include: A company wishing to
• Complete and submit QFC •A
pplicants should submit a establish an RTO must seek
•A
LLC must have a minimum form Q01 ’Application for description of their business permission from the Ministry
share capital of QR200,000; a Licence to Conduct Non- and research plans to the of Business and Trade.
Regulated Activities’ to the QSTP to demonstrate that
•T
he appointment of directors QFC Regulatory Authority. the majority of their activities
must be registered in the The completion and submission will be dedicated to research
commercial registry. A decision of this form will also cover the and development;
to remove a director or confine application to the Companies
their powers is only enforceable Registration Office (CRO) to • If QSTP grants approval then
against third parties when that establish a legal presence in the applicant can either apply
decision is published in the the QFC by incorporating as an to incorporate or to register
commercial registry; and LLC or an LLP, or by registering as a branch office;
a branch office; or
•L
LC’s directors are not •A
pplicant applies for a
required to be Qatari • Complete and submit form licence and completes
nationals or resident in Qatar. Q02 ‘Application for a lease agreement; and
Authorisation to Conduct
The time taken to set up Regulated Activities’ to the •A
nnual financial and activity
a LLC is dependent upon QFC Regulatory Authority. reports must be submitted
the time taken to find an The entity will be required to the QSTP.
appropriate Qatari partner, to provide details including
agree the commercial a description of the proposed 4. Branch
arrangements with that partner, business, financial information
and reflect the arrangements about the firm, and information The establishment of a
agreed in the incorporation on the firm’s IT systems. The branch by a foreign entity
documents of the LLC. This information provided will be requires ministerial approval
may take some time as the used by the CRO to establish and usually strictly requires
incorporation documents are the applicant as a LLC, LLP or the awarding of a contract
drafted in both English and a branch office, and will cover with a governmental or quasi-
Arabic. In addition, official Arabic the licensing of the applicant governmental entity. However,
translations of key documents, to operate in the QFC and the in practice, foreign entities
18Taxation in Qatar
Corporation Income Tax
A new corporate tax regime that is wholly owned by Qatari • Income from real estate • Bad debts approved by the • The Qatar tax year is generally
was introduced with effect from nationals resident in Qatar. situated in Qatar, including tax authorities in accordance the same as the calendar year,
1 January 2010 (Law No.21 Law No.19 of 1989 provided income from the sale of with the criteria set out in although advance approval
of the year 2009 issuing the that nationals of Gulf Co- shares of companies with the tax law; may be sought from the
Income Tax Law). operation Council States were assets consisting mainly of Qatar tax authorities to use
to be treated as Qatari citizens real estate situated in Qatar; • Donations, gift aid and a company’s accounting year
The key points of this regime for income tax purposes. subscriptions to charitable, end. A corporate income tax
are as follows: Therefore, foreign companies • Interest arising in Qatar humanitarian, scientific, cultural return must be submitted
wholly owned by GCC nationals (other than received by or sporting bodies paid in Qatar within four months from the
• There is a flat rate of corporate resident in Qatar are not natural persons); and to government authorities or date of a company’s tax filing
income tax of 10% on taxable subject to income tax in Qatar. public bodies, provided the period (i.e. by 30 April following
profits. Taxable profits are • Bank interest arising outside value does not exceed 5% a 31 December year end). If
defined as profits arising The tax rates and regulations Qatar, provided that it results of net profit in the year in which the company’s capital or profit
out of a taxable entity’s activity provided for oil operations from the taxpayer’s activity the deduction is claimed; and exceeds QR100,000, or the
in Qatar. are governed by Law No.3 in Qatar. head office is situated outside
of the year 2007. This means • A branch’s share of head Qatar, then the tax return must
• Introduction of that oil operations must pay Chargeable gains on the office expenses up to a limit be accompanied by audited
withholding taxes. tax at 35%. sale of capital assets are of 3% (1% for banks) of the financial statements;
taxed as ordinary income. total revenue less certain
In Qatar, corporate income Under the old tax regime there other costs. • Tax liability is payable on
tax is levied on a source was no withholding tax and Deductions the same day as the tax
basis. Therefore, a corporate there was a sliding scale of A deduction is usually Losses return is filed;
body is potentially subject to corporate income tax rates with available for expenses that Losses can be carried forward
corporate income tax if it has a maximum rate of 35% of are incurred in generating for three years after the year • The penalty for late filing of
a Permanent Establishment taxable income over QR5 million. Qatar source revenue and in which they were incurred. the return is QR100 per day
(PE) in Qatar or if it otherwise These rates of tax still apply for that are considered ordinary Losses cannot be carried back. up to a maximum of QR36,000
derives profits from an agreements that were concluded rather than ‘capital’ in and the penalty for failure to
activity or assets in Qatar. before the entry into force of the nature. Specific items of Tax administration enclose accounts with the
The definition of a PE used Law No.21 of 2009 and to which deductible expenditure The tax compliance deadlines return is QR15,000; and
in the New Tax Law is that of governmental or public bodies include the following: and penalties are as follows:
the OECD i.e. ‘a fixed place of were a party. See also our further • The penalty for late payment
business through which the comments below on withholding • Interest on loans attributable to • Taxpayers are required to of income tax is 1.5% of tax
business of a taxpayer is wholly taxes and retention payments. the taxpayer’s Qatari activities; register with the Public due per month (or part of a
or partly carried on, for instance Revenues and Taxes month) that the payment
a branch, office factory, Income determination • Employee costs (including Department (PRTD) within is delayed.
workshop, mine, oil or gas well Examples of Qatar source salaries, wages, gratuities, and 30 days of the earlier of
etc.’ Withholding tax is charged income include: other end-of-service benefits); commencement of taxable Even if an entity has been
on payments from a Qatar activity or receipt of taxable granted an exemption from
resident entity to a non-resident • Income derived from an activity • Tax depreciation of fixed assets. income. The penalty for failing Qatar tax, it will be required
entity which does not have a PE carried on in Qatar; Tax depreciation is calculated in to do this is QR5,000; to submit a tax return.
in Qatar. accordance with rates specified
• Income derived from contracts by the Qatar tax law and • Taxpayers are also required to
No corporate income tax is wholly or partially performed regulations; submit an application to PRTD
levied on a corporate entity in Qatar; for a tax card within 30 days of
• Losses resulting from the commencement of the activity;
sale of assets;
20Personal Income Tax
Withholding taxes with work performed in Qatar. in, or are derived from, Qatar. •T
here are special rules for There are no taxes imposed
Withholding tax was introduced
The new tax law continues There was a tax holiday in QFC entities authorised to on employed individuals’
in Qatar for the first time on the retention system for place until 31 December 2009; conduct an Islamic finance salaries, wages and allowances
1 January 2010. Withholding tax entities that have a PE in Qatar. insurance business, QFC in Qatar. Employers have to
is levied on certain payments The Ministry of Economy •1
00% foreign ownership entities with a reinsurance pay social insurance in respect
made to non-residents in relation and Finance also issued of QFC entities is permitted; business and captive insurance of Qatari employees but have
to royalties and technical services Circular 2/2011 in June companies. A concessionary no obligations for employees
(the applicable rate is 5%) and on 2011 which outlines the •F
ull repatriation of profits and rate of 0% applies to of other nationalities.
interest, commissions, brokerage circumstances in which the capital (e.g. through dividends) reinsurance businesses
fees, directors’ fees, attendance retention system applies is permitted; and captive insurance A self-employed individual may
fees and any other payments for and how the recipient of the companies (the latter may be subject to income tax if he
services carried out wholly or payment can secure payment • There is no withholding tax; elect to be charged at the derives Qatar source income.
partly in Qatar (the applicable of the retained amounts. standard rate instead);
rate is 7%). •T
here are transfer pricing Sales tax/VAT
Transfer Pricing rules dealing with transactions • A tax ruling procedure has
The company that makes the An anti-avoidance provision
between related parties. been introduced; There are currently no sales
payment to its foreign supplier is was introduced by the new tax The QFC tax authority has the taxes or VAT imposed on
required to withhold the tax and law, which gives the Qatar tax power to compute the profit • QFC entities are required operations in Qatar. There
remit to the tax department the authorities very wide powers where transactions between to self-assess their tax liability have been discussions
funds that were withheld by the to counteract transactions that related parties are not on an and file a tax return, together amongst the GCC countries
sixteenth day of the following have been carried out with a arm’s length basis; with accounts and supporting about the possible introduction
month. In the event that the tax avoidance purpose. These computations, within six of VAT but to date no plans
company does not make a powers include substituting •P
rovisions are in place for months of the end of the have been agreed.
payment to the tax department, an arm’s-length value or QFC entities providing Islamic accounting period; and
the company will be liable for a recharacterising transactions. financial services or entering Other taxes
penalty equal to the amount of into Islamic finance transactions •T
ax is due and payable six
unpaid tax due, in addition to the Other tax regimes to ensure that the tax months and one day after the Customs duties are applied
withholding tax. There are also two other tax
treatment is comparable end of the accounting period. to goods with an origin outside
regimes in operation in Qatar: to that afforded to non-Shar’iah the GCC countries, normally
Qatar has a growing network compliant institutions and 2. Qatar Science and Technology at a rate of 5%, but sometimes
of double tax treaties with 1. Qatar
Financial Centre (QFC) conventional transactions; Park (QSTP) QSTP entities at higher rates for specific
over 50 now in force. These The QFC tax law was enacted are fully exempt from Qatar types of goods, such as
may provide an opportunity to in October 2010. The QFC •T
he Qatar government, local corporate income tax in respect tobacco products. Temporary
reduce withholding tax rates. tax law is being retroactively authorities, statutory bodies of their licensed activities and import exemptions are
applied from 1 January 2010. and any QFC entity wholly can import goods and services sometimes available.
Retention Payments Some of the key points of the owned by the Qatar government free of customs duties.
Prior to the adoption of the new QFC tax regime are: or these authorities or bodies are However, QSTP entities are
tax law, a retention system was exempt from tax in the QFC; still required to file tax returns.
in place whereby certain final •Q
FC entities are subject to
contract amounts were required corporation tax on their local •A
n election for special exempt
to be retained from payments source profits at the rate of status is available for certain
made by Qatari entities to 10%. ‘Local source profits’ vehicles including registered
foreign entities in connection are defined as profits that arise funds and charities;
22Audit and accountancy
Audit requirement Reporting method of
Financial Statements
Limited Liability Companies
(LLCs) are required under Financial reporting in Qatar
Article number 119 of the is based on IFRS. There is
Qatar Companies and no local GAAP.
Commercial Law No.5 of
2002 to have their financial Companies mainly use Qatari
statements audited. Riyals or US dollars as their
reporting currency. Another
There are no restrictions currency may be used by a
on appointment of auditors; company if the currency meets
however, listed companies the definition of functional
are required to change or presentation currency
auditors if the same auditors requirements under IAS 21.
have been retained for five
years (rotation requirement). The accounts of entities in
the Qatar Financial Centre
According to Article 248 of are expected to be prepared
the Qatar Commercial and in accordance with IFRS, UK
Companies Law No.5 of 2002, GAAP, US GAAP or standards
LLCs should prepare annual issued by the Accounting
financial statements within and Auditing Organisation for
four months of the financial Islamic Financial Institutions.
year end. Article 249 specifies
that LLCs should send copies Public availability
of these financial statements of accounts
to the Ministry of Trade and
Business within a month The accounts for listed
of their preparation. There companies are publicly
is no fee from the Ministry available. Those for unlisted
for the filing of accounts. companies are not.
There is a requirement under Maintenance of local
Article 17 of the tax Law No.21 books and records
of 2009 for an entity to submit
audited financial statements to Local books must be maintained
the Public Revenues and Taxes to comply with the requirements
Department (PRTD) together of the Tax Law, but companies
with its tax declaration if (i) the can apply to the Public Revenues
profits or capital of the taxable and Taxes Department PRTD for
entity exceeds QR 100,000; an exemption. Most companies
or (ii) annual taxable income maintain books in English but
exceeds QR 100,000; or (iii) in some local companies maintain
the case of a branch, its head them in Arabic. The currency
office is situated outside Qatar. used in the books is usually
24 Qatari Riyals or US dollars.Human Resources
and Employment Law
Employment for most • Employers are allowed to
employees in Qatar is governed impose a probationary period
by Labour Law No. 14 of 2004 which must not exceed six
and, for those employed by months. If the probation is
QFC entities, by Regulation not successful, the company
No.10 of 2006. Some of the must arrange the exit visa
key components of the Labour of the employee, pay for
Law are: their flight home and honour
any benefits specified by
• Employees must be sponsored the contract.
by a company in order to work in
Qatar. The employing company • Employees can work a
usually makes all application maximum of 48 hours per
arrangements for an entry visa week (36 hours per week
and a residence visa on behalf during Ramadan).
of its employees. Due to the
volume of expats entering Qatar, • In the case of redundancy, the
delays can incur in every step of employer must give the same
the process which can cause a notice period of termination as
delay in entering the country or is specified in the employee’s
obtaining a residence permit. contract for an ordinary end of
service. The employer must
• The sponsoring company pay all outstanding wages by
is legally responsible for close of business following the
the actions of anyone last day of employment and
under their sponsorship. they must honour all benefit
and bonus gratuities. The
• All employment contracts employer will also arrange the
should be in writing and must redundant employee’s exit visa
be attested by the Ministry of and pay for their flight home.
Labour. By law an employee
is entitled to paid annual leave
and sick leave, a return flight
home to his or her country at
the completion of the contract,
plus 21 calendar days gratuity
for each year of service.
26Banking in
Trade Qatar
The standard rate of Customs There is a large selection of
Duty is 5% but there are local and international banks
exemptions for certain items in Qatar. Several of the local
and for goods manufactured banks are Islamic institutions.
in GCC countries. Somebody Qatar National Bank is the
wishing to import into Qatar largest commercial bank in
is required to register in Qatar and is 50% owned by
the Importers Register and the government.
be approved by the Qatar
Chamber of Commerce and The normal opening hours
Industry. There are no customs of bank branches are
duties on imports to the QSTP. 7.30am -1pm Sunday-Thursday
but some branches operate
There are no taxes on exports. longer hours. When setting up
Qatar is a member of the World an account, employees need
Trade Organisation (WTO) and to provide a letter from their
is in the process of liberalising employer stating that they
many of its trade policies. do not object to the setting
up of the bank account, as
well as provide a copy of their
residence permit.
The Qatar Development Bank,
which is government owned,
offers financing to small-and
medium-sized industries.
The banking sector is overseen
by the Qatar Central Bank
(QCB) which applies banking
standards and regulations for
the commercial banks. There
are plans by four of the GCC
countries (Qatar, Saudi Arabia,
Oman and Bahrain) to establish
a GCC central bank located in
Saudi Arabia.
In February 2011 the QCB
asked conventional lenders
to close down their Islamic
banking operations. The order
was effective immediately but
the QCB gave lenders a grace
period until 31 December 2011
to close down the operations.
28HSBC in Qatar
Who we are Historical Milestones Network the third consecutive year and new products, processes and
reached over 700 students. technologies and establish HSBC
The year 2012 marks HSBC’s 1954 – As one of the first foreign HSBC Qatar has three branches. as a leader in environmental
58th year in Qatar. With an banks locally incorporated in Qatar, • With the cooperation of the efficiency among our peers.
unrivalled global network and a HSBC Bank Middle East Limited There are more than 370 staff Student Services Center Our goal is to reduce annual
rich heritage in Qatar, HSBC is (Qatar) started operations in 1954. members of which 17% are at Education City, HSBC employee CO2 emissions
well positioned to play a leading In the past 57 years HSBC has Qatari nationals. funds the annual English by 1 tonne of CO2.
role in the local economy and been a pioneer in bringing to this Enrichment Programme and
continue its commitment to the emerging market a wide range of Awards for Excellence to-date 90 Qatari students • HSBC members of staff
country. The diverse workforce banking products and services. have received 180 hours of annually take part in a number of
of international banking Best Cash Management Bank in English Language Skills training environmentally-friendly actions
professionals, combined 1986 – HSBC Qatar being the Qatar 2008, 2009, 2010 & 2011, to improve their chances of and awareness programmes
with local Qatari talent, offer first bank to install an ATM. Euromoney Customer Poll. qualifying for higher education that include WWF’s Earth
HSBC customers the best at international universities. Hour, World Environment Day
in international knowledge 1987 – HSBC introduces Best Corporate / Institutional celebrations and clean-up/
and understanding of the Electronic Banking in Qatar. Internet Bank in Qatar • HSBC and British Council are greening initiatives.
local market dynamics. 2010 & 2011, by Global collaborating on a series of
2003 – First Bank to offer Finance magazine. reading initiatives like the Qatar Community
The new state-of-the-art main ’Instant Electronic Advising’ Boys Book Challenge and Kids • HSBC takes part in two
office officially opened its of Trade transactions in Qatar. 2010 – HSBC Amanah ‘Best Read, to improve reading skills major events annually that
doors on 11 February 2010 Islamic Wealth Management of students in independent contribute to fundraising for
and forms part of the branch 2004 – Lead managing Qatar’s Provider‘, Islamic Finance news. schools across Qatar. cancer research and cancer
network that includes branches first Islamic Sukuk for the awareness. During these
in, City Center and Salwa Road. Government. Corporate Sustainability Environment events, staff volunteers are
The bank offers a full range of • The HSBC Water Programme encouraged to take part and
cross-border banking products 2005 – First Bank to offer Sustainability is at the heart is a five-year partnership make personal contributions.
and services from commercial ‘Factoring Services’ in Qatar. of HSBC’s long-term strategy with WWF, WaterAid and
and global banking to corporate and in Qatar we aim to ensure Earthwatch to tackle water • HSBC Qatar initiated the
clients. For the retail banking 2007 – First bank to offer the that our actions support the risks in river basins; bring safe Iftar meal distribution to
segment, customers are also Cheque Outsourcing Service global strategy which includes water and improved sanitation migrant workers in 2007.
offered wealth management in Qatar. sustainable business principles to over a million people; and Since then, this project has
and offshore banking that permeate every level of our raise awareness about the grown into a regional project
products and services. – First bank to offer Commercial business and culture. global water challenge. now implemented by most
Cards in Qatar. Throughout the programme, countries in the GCC. Meals
Education HSBC will share findings are distributed to labourers
– Launched a dedicated team • HSBC in Qatar is a founding and insight to contribute during the Holy month of
for Business Banking Customers member on the board of Injaz to global understanding Ramadan and staff volunteers
focusing on the Small and Qatar (Junior Achievement). and best practice among are involved in the project.
Medium Enterprises (SME). Since its inception in 2007, NGOs, policymakers and
HSBC has provided more than businesses, as well as • HSBC supports the Hope
2008 – First bank to offer 80 staff volunteers to conduct engaging its own employees. Centre for children with special
Integrated Receivables over five different courses to needs. The support includes
Management in Qatar. an estimated 1,400 students. • Starting in 2012, HSBC has financial contributions to the
JA More than Money – one of implemented a global action school as well as fun activities
– First bank to offer the Wage HSBC’s global programmes has plan to reduce our annual for the children.
Packets service in Qatar. been successfully conducted for CO2 emissions, develop
30Country overview
Capital city Doha
Area and population Area of 11,521 sq km and population of 1.76 million (at January 2012)
Language Arabic is the official language and English is widely spoken
Currency Qatari Riyal (QR) which is divided into 100 dirhams. It is pegged to
the US dollar at rate of US$ = QR3.64
International dialling code +974
National Holidays 2013
National day 18 December
Eid Al-Fitr 28 of Ramadan to 4 of Shawwal
Eid Al-Adha 9 – 13 of Zilhijjah
Business and banking hours Government offices: 7am – 2pm Sunday – Thursday
Banks: 7.30am – 1pm Sunday – Thursday
Stock exchange
Political structure Constitutional Monarchy
Economic statistics FDI US$5.5 billion in 20101
GDP US$173.85 billion in 20112
1
UNCTAD World Investment Report 2011
2
GDP in current prices per IMF WEO Database
32Contacts
Declan Mordaunt, Tax Partner
Tel: +974 4419 2801
Email: declan.mordaunt@ qa.pwc.com
Website: www.pwc.com/middle-east
Website: www.hsbc.com.qa/1/2/
Phone: +974 4438 2100
Head Office: HSBC Main Office,
Al Matar Street Umm Ghuwailina,
Doha, Qatar, P.O. Box 57
3rd Edition: January 2013
Copyright
Copyright 2013. All rights reserved.
‘PwC’ and ‘PricewaterhouseCoopers’
refer to the network of member firms of
PricewaterhouseCoopers International
Limited (PwCIL), or, as the context requires,
individual member firms of the PwC
network. Each member firm is a separate
legal entity and does not act as agent of
PwCIL or any other member firm. PwCIL
does not provide any services to clients.
PwCIL is not responsible or liable for the
acts or omissions of any of its member
firms nor can it control the exercise of their
professional judgment or bind them in any
way. No member firm is responsible or
liable for the acts or omissions of any other
member firm nor can it control the exercise
of another member firm’s professional
judgment or bind another member firm
or PwCIL in any way.
141TP_Qatar_201212_3
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