Qatar is one of the tax-free jurisdictions in the world, and one of the best-performing countries among the GCC nations. Located in Western Asia, the ground acts as an investment magnet. Foreign investors prefer to proceed ahead and start a business as it provides multiple benefits. At the same time, the established business entities need to abide by the taxation policies set by the governed authorities, and also to develop a proper tax regime concerning the operations and make most of the tax laws.
The State of Qatar operates a territorial taxation system that holds regimes in which the foreign investors can work, namely:
These two regimes are discussed in detail in the latter part of this guide. The core focus of this guide is to highlight the tax essentials that an investor needs to know if he/she is planning to proceed ahead with the business setup in Qatar.
The business entities established in Qatar enjoy relatively low tax as compared to other countries. Now, as compared to the Qatar Tax Laws, the companies should register with the Public Revenues and Taxes Department (PRTD) within 30 days from the date of commercial registration. In case of any failure, the business entity needs to pay a penalty of QR 5,000.
With the rise in Qatar’s economy, the Government has taken necessary measures to strengthen the financial system of the nation, and perform relevant international financial policies, to enhance the economic growth and boost the FDI. Qatar waves off different types of taxes, which includes:
Exemption of the types mentioned above of taxes turns out to be one of the provoking factors that investors look forward to company formation in Qatar.
The taxable income under the two-tax regime in Qatar is explained below.
This tax regime is operated by the General Tax Authority (GTA), and the main categories of taxable income include:
Under this regime, the taxable profits are classified as Qatari sources. Profits generated by the Qatar Financial Centre (QFC) firm provided in Qatar or outside are non-taxable.
The taxation system in Qatar comprises of the following elements:
The corporate tax is a specific amount that is to be borne by the business entities upon reaching a specific threshold of financial gain. The corporate tax in Qatar is levied at 10%, that gets calculated on the total income generated by the corporate body.
However, it does not apply to the business entities that are wholly owned by Qatari nationals or any GCC nationals. Here’s a guide on How to File on Corporate Tax in Qatar.
The concept of withholding tax can be understood as a tax that is to be paid to the non-resident individuals or companies to the business activities carried outside the region. Qatar holds a withholding tax levied at 5 per cent. In Qatar, there is no withholding tax on dividends, but royalties are subjected to a 5% withholding tax.
Apart from the royalties, technical service fees paid to the non-residents are subject to WHT. Also, a count of 7% gets applicable to the commissions, brokerage, directors’ fees, attendees fees, and other services performed in Qatar.
The General Authority of Customs applies the Common Customs Law of the GCC States issued in the State of Qatar. The standard customs tariff stands as 5 per cent, however exempting certain goods like tobacco and its alternatives. Altogether there are 672 goods exempted from the customs duties under the Common Convention of the GCC States. The custom duties charged on the specific goods are highlighted below:
However, temporary import exemptions are sometimes available.
The tax law gives power to the Qatar Tax Department (QTD) to counteract any tax advantage obtained by arrangements, operations or transactions, one of the main purposes of which is to avoid paying tax. In those cases where tax avoidance is present, the QTD may apply the arm’s length value to the particular transaction and adjust the amount of tax due by the taxpayer.
The Value Added Tax (VAT) is a consumption tax that gets levied on goods and services consumed. The GCC VAT framework has been designed to leverage new sources of revenue. As of now, Saudi Arabia, United Arab Emirates and Bahrain have implemented the VAT framework.
Currently, there is no VAT in Qatar, but according to the GCC VAT Framework Agreement the same will be applied by the year 2021. VAT will impact most sales of goods and services in Qatar, with limited exemptions (e.g. financial services, insurance) and consumption tax belief. VAT-registered businesses will be able to claim credit for VAT paid on their expenditure, relating to their taxable business activities.
As per the State of Qatar tax regime, failure to pay relevant tax would end up fetching huge penalties for the different business entities in Qatar. Failure to file a tax return by the end of the financial year will result in a penalty of QAR 500 per day to a maximum count of QAR 180,000. All the taxpayers need to comply with the GTA and obtain a respective tax card that needs to be renewed every year. Failure to renew the registration and tax card would fetch a penalty of QAR 20,000.
Dealing with the corporate tax is a tiresome job and a complicated task if one is not aware of the relevant proceedings. At the same time, any errors in the tax recordings might lead to big trouble while proceeding towards the company audit. A tax expert can help you in the following ways:
Professionals are well-versed with the different techniques that get applied while dealing with business books. An experienced tax professional will help you to solve your business books securely, to ease the audit process in Qatar towards the end of the financial year.
Tax experts keep a continuous check on the business transactions, and thus continuous monitoring helps them to maintain accurate records on Tax and VAT Return Filing. Here’s a guide on taxations services in Qatar.
The tax professionals deal with the tax proceedings daily and can highlight the existing errors at the initial stage. Rectifying the mistakes at the initial stage helps the business entities to streamline their business records.
It becomes tough for a business investor to keep track of the everyday regulations. However, having an expert by your side makes the process more accessible, and the business entity is updated with the relevant changes that get implemented.
Business Setup Worldwide has been one of the prominent players in the business consulting market. Since inception, we have been helping business investors to convert their business ideas into reality. At BSW, our expert advisors take the initiative of understanding the business needs and cater to the requirements accordingly. Along with the incorporation process, we take the necessary steps to help you in the legal compliance and accounting and bookkeeping and tax essentials. Our tax experts will help you in the following:
If you are looking forward to avail tax services for your business, feel free to have a word with our experts. Contact us today-we’d be glad to assist.