The Qatari Minister of Economy and Finance has issued draft executive regulations for the implementation of Law No. 21 of 2009 on corporate tax for non-Qatari companies. The draft has been sent to foreign firms for comments before the law is enforced.
The Law No. 21 of 2009 envisages a uniform tax rate of 10 percent from January 1, 2010. Earlier, corporate tax was collected on variable slabs up to 35 percent.
Income derived from services contracts performed partially or wholly in the country, banking interests and revenues derived offshore by business operations inside the country, commercial representation and brokerage and agency commissions derived offshore from business inside the country are exempt from tax, according to the regulation.
The tax law exempts shareholding companies' bonds and other authorised securities, gross income of national or expatriates, natural or legal persons and their shares of national or expatriate person profits.
May 30, 2010
Analysis and Forecast: Decreasing Risk
The news confirms that the Qatari government is intent on enforcing the new law on the corporate taxation of foreign firms. This has taken longer than expected and concern was mounting as to whether it will indeed be implemented. The news that it is now moved closer to implementation is a step in the right direction.
The law is expected to make Qatar more attractive to foreign investment as it simplifies its tax procedure. However, there were concerns about its applicability and details of its implementation. These were expected to be addressed in the consultations with the foreign firms that will be subject to the new law. Once approved, it will be seen as a step towards Qatar’s efforts to diversify the economy away from oil and gas.
The figure below shows the approximate make-up of the Qatari GDP in 2009.