The State of Qatar is one of the few income-tax free countries in the world. Qatar with its liberal business laws, world-class infrastructure, availability of highly skilled international labour force, and effective legal frameworkit serves as an ideal place to start your business in the MENA region. The government of Qatar is transforming the country with its grand economic diversification program that encompasses rapidly creating the infrastructure that assists entrepreneurs and investors to expand their businesses in the state.
Similarly, foreign investments are welcomed into the country with numerous incentives for the investors and companies who are operating in the non-oil sectors of business as it aligns with the government’s economic diversification plans. Right now, Qatar is open to foreign investments as the recent legal liberalisation has reduced the restrictions of international investment into the peninsula combined with the accelerated economic growth due to the supportive business environment.
Tax Laws in the State of Qatar
Qatar has no existent system of personal income taxes, VAT or sales tax for international individuals, or companies registered in the State and no capital gains tax or wealth tax for storing or holding wealth in the country. These systems are beneficial to the investors by allowing them to secure their investments in the country without any deductions, consequently fostering an international investment ecosystem in Qatar significantly strengthening the start-ups and businesses that are operating out the state.
The State of Qatar exercises two tax regimes in the country which applies to the majority of the businesses operating in Qatar, and the Qatar Financial Centre (QFC) which follows an independent tax policy on its own for the companies operating inside its zone, similarly the general Tax Law enforced at different levels by the respective Qatari government organisations.
According to the tax law, every company registered & operating in the State of Qatar must register for corporate taxes with the Tax Department, else the company might be subjected to fines and penalties. The registration of the company with the Qatar Tax Authority must be done within a month from the date of incorporation of the company in Qatar.
To explain, the State of Qatar only has corporation tax mainly applicable to foreign-owned companies in the country, import duties on essential items which is levied at a rate of 4 percent of the value of the products, and service tax of ten percent for all the non-governmental services offered by private players, while government levy of five per cent is enforced only on the restaurant and hotel bills.
Corporate Taxes in Qatar
The corporation tax in Qatar is chiefly enforced on private businesses and foreign owned-companies registered in the country. However, large Qatari state-owned corporations are exempt from paying the corporate tax as they are handled by the internal governmental agencies who oversee the finances of these large corporations.
The corporate tax in Qatar is payable on a progressive scale on any corporate income derived from sources in Qatar more than QAR 100,001 form a standard base of ten per cent up to a maximum rate of 35 per cent on any income excess of QAR five million only applying to the oil & gas operations.
On the other hand, there are a number of allowable deductions from the corporate capital profits that include
- Loan interest payments
- Salary deductions, wages or similar payments made to services
- Rentals and maintenance
- Insurance premiums
- Bad debts
- Business operational expenses (i.e., buying raw materials, machinery, equipment etc.)
- Depreciation of assets etc. that can be audited and reported to the authorities.
The main categories of taxable income in Qatar comprises of the gross income or capital profits derived from
- Activities carried out in Qatar
- Contracts wholly or partially performed in Qatar
- Real estate in Qatar
- Exploration, extraction or exploitation of natural resources situated in Qatar
- Capital profits for services delivered in Qatar
- Consideration for the goods and services paid to a head office, branch or related company in Qatar
While analysing the financial statements and filing the corporate taxes are a tedious and complicated procedure which requires accurate information with a robust legal understanding of the Qatari Tax laws, procedures and regulations we at business setup worldwide can offer assistance to file corporate taxes in Qatar. Contact us, for any information and get a clear understanding of the nuances and wise procedures to be followed while preparing the report and filing your corporate taxes with the respective Qatari authorities.