Qatar DOING BUSINESS IN - DLA Piper
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DOING BUSINESS IN Qatar
DOING BUSINESS IN QATAR
Overview the Qatar Financial Centre and the different to the shareholding
Qatar is one of the richest countries Qatar free zones all laws in Qatar proportions to reflect the different
in the world. This economic are issued in Arabic only and formal degrees of participation which the
success has been fuelled by the translations are generally not made respective shareholders have in the
development of its oil and gas available by the Qatari authorities. LLC’s management and operation.
reserves. In recent years, the Any proceedings before the Qatari The foreigner’s share of profit will
government has taken steps to Courts are heard only in Arabic. be taxable.
diversify away from oil and gas
through large infrastructure projects Structures for doing B. ARTICLE 207 COMPANY LAW1
and has focussed on promoting the business in Qatar Article 207 companies are essentially
role of SME’s in the private sector. Foreign companies or individuals joint venture arrangements,
wishing to establish a business which are owned wholly by the
Qatar is in the process of libralising presence in Qatar have various government or a public authority
its foreign investment restrictions. options available to them. Set out or partly by the government or a
Qatar has approved laws which below are the most common forms public authority in partnership with
enable foreign investors to hold of establishment. foreign investors.
100% of the issued share capital
of Qatar limited liability companies A. LIMITED LIABILITY The main advantage of an Article 207
in all sectors of the economy and COMPANY (“LLC”) company is that the Companies
up to 49% of the issued share The most common means for Law only applies to the extent
capital of public or private joint foreign companies to operate a that it does not conflict with
stock companies. business and incorporate an LLC in the Memorandum and Articles
Qatar is to register a company which of Association, Joint Venture
Qatar has also recently introduced is at least 51% owned by a Qatari Agreement or other contracts of
a number of legislative and national or a company wholly owned establishment. The shareholders
administrative reforms to protect by Qatari nationals. Qatar’s foreign are therefore able to draft those
the rights and welfare of migrant investment law does however permit documents free from all or any of
workers in Qatar. up to 100% ownership in all sectors the restrictions contained in the
of the economy in Qatar with the Companies Law. Also, the foreign
Legal background exception of banking, insurance investor’s share ownership in an
Qatar is a civil code jurisdiction. and commercial agency sectors or Article 207 company can be more
The Qatari legal system and its any other sector of the economy than 49%, with the approval of the
key laws are modelled on those of as determined by a resolution of Council of Ministers.
Egypt which, in turn, are modelled the Council of Ministers (Qatar’s
on the Napoleonic codes of France. executive authority). C. TEMPORARY BRANCH OF A
The judiciary in Qatar was expressly FOREIGN COMPANY
established as an independent body An LLC must comprise of a The Ministry of Commerce and
by the provisional constitution and minimum of one and a maximum Industry may grant a temporary
was divided into two court systems: of fifty partners. The partners are branch license to operate in Qatar to
the civil court and commercial free to determine the capital of an a foreign company which is a party
system and the Shari’a court which LLC divided into equal shares of not to a contract with a government
administers Islamic laws. less than QR 10 each. The liability or quasi-government entity.
of each partner for the LLC’s debt is The foreign company becomes
It should be noted that the Courts limited to his share capital. fully licensed and registered in
in Qatar do not rely on a formal Qatar. However, the license and
system of precedent and there is no Where agreed by the shareholders, registration are based upon the
formal reporting of court decisions. the management of the LLC can contract and therefore limited to
This can lead to an increased level of be conducted by the foreign the duration of the contract and the
unpredictability in litigious matters. shareholder. Further, the profits of works to be performed under the
With the exception of the laws of the LLC can be split in proportions contact. If additional contracts are
1
This is a reference to Article 207 of the Commercial Companies Law No. 11 of 2015 (“Companies Law”).
2DLAPIPER.COM
obtained they must be registered professional and financial services permit 100% foreign ownership.
and appended to the foreign or related support services. Within Entities licensed by the QFZA will
company’s commercial registration. the range of permitted activities benefit from renewable 20-year
A company which is a party to are non-regulated activities and tax holidays, that is, zero corporate
a subcontract which stems from a regulated activities. Firms planning tax and zero customs duty.
main contract with a government or to conduct regulated activities,
quasi-government entity may also such as banking, insurance or The QFZA is planning to create a new
qualify for this exception. securities businesses, will need to free zone in Msheireb Downtown,
apply for authorization from the Doha which will be the home to an
D. REPRESENTATIVE QFCRA. Firms planning to conduct upcoming Media City and top class IT
TRADE OFFICE unregulated activities may apply for companies. The Media City, currently
A foreign company may, with the a license through a simpler process being established, aims at managing
discretionary approval from the from the QFCA. and developing media activity in
Minister of Commerce and Industry, Qatar, and enhancing its position as
establish a representative trade F. QATAR SCIENCE AND a venue for attracting international
office (“RTO”). A RTO is a method TECHNOLOGY PARK media, technology companies,
to establish a “shop front” in Qatar. The Qatar Science and Technology research and training institutions in
The RTO can be used to promote Park (“QSTP”) offers a “free zone” the media and digital media.
a foreign company in Qatar and legal and business environment to
introduce it to Qatari companies foreign or local technology-based The trade
and projects but the RTO cannot companies. In order to set up in the concealment law
conduct business in Qatar i.e. it may QSTP the company’s main activity Individuals and companies wishing
not earn revenue. must relate to the advancement to set up in Qatar should be aware
of technology. This reflects the that the Trade Concealment Law is
E. QATAR FINANCIAL CENTRE primary purpose of QSTP which aimed at preventing non-Qataris from
The Qatar Financial Centre (“QFC”) is to promote scientific research engaging, and Qataris from colluding
operated by the Qatar Financial (rather than provide a business with non-Qataris, in commercial
Centre Authority, is an on-shore park facility). and professional activities which
financial and business centre circumvent the foreign investment
established by the Government Applications for carrying out laws. Violation of this law can result in
of Qatar in February 2005. business within the QSTP are heavy fines and/or imprisonment.
The QFC Law permits 100% submitted to a licensing board who
ownership of authorised institutions will determine the grant and scope Commercial agencies
by non-nationals and a complete of such a license. Companies whose in Qatar
repatriation of profits. The QFC’s activities are authorised by the QSTP The commercial agency
commercial and regulatory can have 100% foreign ownership arrangement is for a foreign
environment and systems conform and are exempted from all tax. company wishing to make
to international standards and are direct sales in Qatar without
separate from and independent G. QATAR FREE ZONES establishing an LLC, branch or
of the existing Qatari systems. Qatar has developed two free any formalised legal presence in
The QFC Authority (“QFCA”) and the zone areas to accelerate economic Qatar. The Commercial Agency Law
QFC Regulatory Authority (“QFCRA”) diversification. The airport free allows for the appointment of a
manages and enforces the QFC’s zone, Ras Bufontas, next to Hamad local commercial agent to market
regulatory systems, while the QFC International Airport and Umm goods and services in Qatar with
Companies Registration Office, Alhoul, the port free zone. The free commission being paid to the
registers limited liability companies zones are focused on certain key agent. Exclusive agencies may
and limited liability partnerships sectors, namely logistics, chemicals be registered at the Ministry of
within the QFC. and emerging technologies. To Commerce and Industry. In order to
establish an entity in the free zones, do this, the commercial agent must,
The QFC law prescribes a range the entity must become licensed inter alia, be a Qatari national or a
of activities which may be by the Qatar Free Zones Authority company which is wholly owned by
conducted in, or from, the QFC. (“QFZA”). The free zone regulations Qatari nationals.
These activities are primarily are based on English law and
3DOING BUSINESS IN QATAR
A significant disadvantage of the an exception in that non-Qataris are foreign investor in Qatar. It does
agency arrangement is that once now permitted to own real estate in not constitute legal advice nor does
established it can be very difficult certain restricted areas, for example, it purport to address every legal
to terminate an agency relationship the Pearl, West Bay Lagoon, and issue or summarise current rules,
and if terminated the principal may Al Khor Resort. structures or regulatory frameworks.
be liable to compensate the agent.
The foreign investment laws The regulatory system in Qatar is
Employment in Qatar allow foreigners to enter into dynamic and subject to frequent
Aside from a few limited exceptions, long term leases of land allocated changes in application and
companies operating in Qatar for implementation of their interpretation. This guide is based
are subject to the local Labour investment projects. on material available to DLA Piper
Law and Immigration Law. as at November 2020 and will
One of the key features of the Tax in Qatar require amendment from time to
Labour Law includes a “Qatarization” Qatar does not have personal income time as legislation is amended or
plan, which obligates companies tax. The Qatar Tax Law imposes a 10% new policies or interpretations are
to implement a plan to employ flat income tax rule on businesses adopted by government authorities,
qualified Qatari-nationals rather other than those wholly owned by courts and/or regulators.
than non-Qataris. In the absence GCC nationals. The Qatar Tax Law We recommend that you obtain
of a qualified Qatari national, establishes a withholding tax regime legal advice and liaise with the
the company is free to hire a on payments to non-residents of 5% relevant government authorities
foreign national. A foreign national of the gross amount of royalties and on how the law applies to foreign
working and residing in Qatar must technical fees, interest, commissions, investors in respect of a particular
be sponsored by his/her employer brokerage fees, directors’ fees and investment or business activity at
and obtain a work and residence any other payments for services the relevant time.
visa. Another important aspect of carried out wholly or partly in Qatar.
the Labour Law is the mandatory VAT is due to be implemented We hope you find this guide to be
end of service benefits for workers. in Qatar. a useful overview of the high level
An employer in Qatar must pay legal matters in relation to doing
workers’ salaries into a local bank Entities established in the QSTP and business in Qatar. Please do not
account in accordance with Qatar’s the Qatar free zones are exempt hesitate to contact us if you have
Wage Protection Scheme. from tax. any queries regarding the material
set out in this guide or if you require
Real property in Qatar General specific legal advice in respect of an
The general rule is that This guide only provides an overview establishment in Qatar.
non-Qataris may not own real of legal matters which DLA Piper
property in Qatar. However, there is believes are relevant to a potential
For further information, please contact
Brenda Hill Will Seivewright
Legal Director, Partner, Head of Corporate,
Doha, Qatar Middle East
T +974 4420 6126 T +971 4438 6150
brenda.hill@dlapiper.com will.seivewright@dlapiper.com
The information contained in this briefing does not constitute legal advice. Specific legal advice should be
taken before acting on any of the topics covered.
4DLAPIPER.COM
DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at dlapiper.com. This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome. Copyright © 2020 DLA Piper. All rights reserved. | 23 Nov 2020 | A07973-1
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