Just as in any other country, Qatar has its own specific guidelines and requirements about foreign nations operating in this country. There are adequate services in Qatar for legal, financial matters, tax matters, business counselling, company background checks and feasibility studies. Professional experts are available for any professional advice in such matters.
To begin a business in Qatar, foreign companies will have to appoint a service agent / sponsor first. Experts, however, say that the requirement for service agent / sponsor in Qatar is getting more lenient and may be abolished in years to come.
General laws for setting up and operating a business establishment in Qatar
According to Commercial Companies Law No.5 (2002), a company must have its headquarters in Qatar. The company can take different forms, depending on its size, relationship between the participating entities, desired structure – singular, as part of larger group, or within a holding company etc. However, generally accepted types of companies that are allowed to operate in Qatar are:
- Joint Company
- Limited Partnership Company
- Particular Partnership Company
- Shareholding Company
- Limited Liability Company
- Equities Partnership Company
All the required documentation, conduct, procedures are all outlined in the Commercial Companies Law. In all legal contracts, the language used must be Arabic, and always, the Arabic version will take precedence over the English translation.
Partnership Company
Commercial partnership arrangements are common in Qatar. A partnership company comprises two or more partners responsible for the liabilities of the company. But, in such cases, all joint partners should be Qataris, and every partner has the power to hold commercial meetings and businesses under the name of the company. But, it is mandatory to first get approval before proceeding with any investment.
Limited Partners
They are only liable to debts incurred by the company, or to the extent of their registered investment. They have no management authority.
Equities Partnership Company
An equities partnership company comprises two teams , with one or more partners jointly responsible for debts of the company in all their assets, while the other includes shareholders.
Shareholding Company
This company is formed through a shareholding arrangement, approved by Ministry of Economy and Commerce, prior to establishment of the company. The capital of the company is distributed to negotiable shares of equal value. The number of shareholders should be at least five in number, with all of them being Qataris.
Foreign Ownership
Generally, foreign business owners and investors will often form a Private Limited Liability Company (LLC) to operate within Qatar. In such cases, the company is required to have a minimum authorized share capital of QR200,000 and two shareholders, and maximum of 30 shareholders. Foreign investors are allowed 49% ownership of the share capital, while the remaining 51% is held by one or more Qatari partners.
The Ministry of Economy and Commerce may grant permission for foreign investors’ shareholding to exceed 49% and up to 100% depending on case by case basis, provided, the business is compatible with Qatar’s development plans.
Certain other factors such as whether the company exploits domestic raw materials, offers new products or establishes fresh technologies, and interest of national cadres are taken into consideration.
Once, it is confirmed that the business is beneficial to Qatar and is supported by industries, the foreign investor or other investors are allowed to maintain a controlling stake in the company.
Some supported industries include: Agriculture, Education, Tourism, Health, Developing and exploitation of natural resources, energy and mining, consulting services, Technical services and IT services. The Ministry of Economy and Commerce may even exempt foreign companies investing in the supported industries through various exemptions, including income tax for 10 years, customs only for imported equipment and machinery necessary for setting up business, imported raw materials, semi-manufactured products necessary for production, that are not otherwise available in Qatar.
At present, Qatar is moving ahead with legislation that allows complete ownership of companies operating in the country. A draft law to this effect was passed last year, wherein foreigners are allowed to own 100 percent of businesses in all economic sectors. Investors are allowed to hold nearly 49 percent in listed companies, or larger stakes with government approval.
Qatar Tax System
Personal Tax: There is no tax on personal per capital income. This implies that employees can take home their wages and salaries without deduction of tax. But, an individual who gets into any types of commercial activity with an interest to gain income will have to pay tax, as per Companies Tax Law.
The income of Qatari and GCC nationals, residing in Qatar, is exempt from tax. The rate of tax is 10 percent of the company’s Total State Income, paid annually. This fixed rate is however applicable only on businesses, and not on individual income or Personal Tax.
Typical business costs are deductible, and losses can be rolled over for a period not more than three years from the original accounting declaration. The term ‘commercial activity’ could imply any vocation, service, profession, industry, trade, speculation, contractual work, or any profit and income making business. The rental income is subject to a fixed rate of 10 percent.
Tax exemptions
Tax exemptions are applicable to revenues on Public Treasury Bonds, Public Corporation Bonds and Development Bonds, Income from shares that comply with conditions in Article 4 of Law No.21 of 2009, small handicraft businesses with less than 3 employees, income of companies working in fisheries, agriculture, aerial, and maritime transportation on condition of reciprocity, and Qatari legal persons residing in the State.
There are no other taxes, as Qatar is among the topmost low taxation countries across the world, which makes it attractive to expats.
The Customs Duty for general cargo entering Qatar is about 5%. For temporary imports into Qatar, permission from the General Director of Qatari Customs is necessary, apart from a cheque or bank guarantee to Customs Department towards duty charges for shipment. This will be refunded on producing proof of export from Qatar. Normal customs clearance by air is 1-2 days and by sea is 2-4 days.
As for banking, foreign investors require permission from Qatari Government to invest in the banking and insurance sectors.
For any further information on Qatar Labour Laws, visit https://portal.www.gov.qa/wps/portal
