Just like any other country, Qatar has its own regulations and standards that apply to foreign nationals working in the country. In Qatar, there are various services available to assist with legal matters, financial concerns, taxation, business consultancy, company background checks, and feasibility studies. Professional experts are readily available to provide expert guidance on these matters.
According to experts, foreign companies looking to establish a business in Qatar are currently required to appoint a service operator or sponsor. However, there are indications that this requirement may become more lenient in the future and could potentially be abolished.
General laws for setting up and working a business foundation in Qatar
According to Commercial Companies Law No. 5 (2002), companies are required to have their headquarters in Qatar. Companies may have various structures depending on factors such as their size, relationships between participating entities, and whether they are part of a larger group or held within a holding company. Nonetheless, there are generally accepted types of companies that are authorized to operate in Qatar:
- Joint Company
- Restricted Partnership Company
- Specific Partnership Company
- Shareholding Company
- Restricted Liability Company
- Values Partnership Company
The Commercial Companies Law provides a comprehensive framework for all the required documentation, procedures, and processes. It requires that all legal agreements be in Arabic language, and in case of any conflict between the Arabic version and the English translation, the Arabic version will take precedence.
In Qatar, business partnerships are a common occurrence. A company with at least two partners is formed, where all partners are liable for the company’s obligations. In such a scenario, all joint partners must be Qatari, and each partner has the authority to conduct business meetings and transactions under the company’s name. However, it is mandatory to obtain prior approval before proceeding with any investment.
Limited Partners in Qatar refer to partners who have limited liability in a company. These partners are not involved in the day-to-day management of the business, but they contribute to the company’s capital. They are also not personally liable for the debts of the company beyond the amount of their investment in the business.
Limited Partners in Qatar have certain rights and privileges, including the right to receive a share of the profits of the company based on their investment, and the right to participate in the decision-making process for certain significant matters related to the business.
However, Limited Partners in Qatar also have certain limitations. They cannot participate in the management of the company, and their liability is limited to the amount of their investment in the business. They also do not have the power to bind the company to any agreements or transactions.
Limited Partnership is a common business structure in Qatar and is regulated under the Commercial Companies Law No. 11 of 2015.
Values Partnership Company
A partnership limited by shares is a type of company in which at least one partner is jointly responsible for the company’s debts to the extent of their entire assets, while the remaining partners are shareholders.
The Joint Stock Company is established through a shareholding process that must be approved by the Ministry of Economy and Commerce prior to the company’s formation. The capital of the company is divided into transferable shares of equal value. The number of shareholders should be at least five, and each of them must be Qatari.
For the most part, foreign business and financial specialists will frequently frame a Private Limited Liability Company (LLC) to work inside Qatar. In such cases, the company is required to have a minimum approved offer capital of QR200, 000 and 2 shareholders, and a limit of 30 shareholders. Foreign financial specialists are allowed 49% responsibility for share capital, while at least one Qatari partner holds the staying 51%.
Permission to exceed the 49% shareholding limit for foreign investors and up to 100% may be granted by the Ministry of Economy and Commerce on a case-by-case basis, subject to the business aligning with Qatar’s development plans.
Other factors such as whether the company utilizes local raw materials, introduces new products or technologies, and supports national industries are also taken into consideration.
Once it is confirmed that the business is beneficial to Qatar and aligns with its economic development goals, foreign investors or other stakeholders may be allowed to maintain a controlling stake in the company. This decision is made based on various factors, including the use of domestic raw materials, the introduction of new products or technologies, and the involvement of national entities.
Industries such as agriculture, education, tourism, healthcare, natural resources development and exploitation, energy and mining, consulting services, technical services, and IT services are included. In addition, the Ministry of Economy and Commerce may grant exceptions to foreign companies investing in these industries, such as exemption from personal income tax for a certain period, exemption from customs duties on imported equipment and machinery required for setting up the business, as well as on imported raw materials and semi-manufactured products that are not otherwise available in Qatar.
Qatar is currently progressing with legislation that allows full ownership for operating in the country. A draft law was passed last year to this effect, where foreign businesses are allowed to own 100 percent of the business in all economic sectors. Investors are permitted to hold up to 49 percent in listed companies, or even higher stakes with approval from the government.
Qatar Tax System
Personal Tax: Qatar does not impose personal income tax on its citizens and residents. This means that employees can receive their wages and salaries without any deductions or taxes. However, individuals who engage in business activities with the aim of generating income are subject to taxes as per the Companies Tax Law.
The income of Qatari and GCC nationals residing in Qatar is not subject to tax. The tax rate applicable to businesses is 10 percent of the company’s Total State Income, which is paid annually. However, this fixed rate only applies to businesses and not to individual income or Personal Tax.
Business expenses are usually deductible, and losses can be carried forward for a maximum of three years from the original accounting statement. The term ‘business activity’ encompasses any occupation, services, profession, industry, trade, investment, contractual work, or any profit and income-generating enterprise. Rental income is subject to a fixed rate of 10 percent.
Various tax exemptions are available for different types of incomes in Qatar. These include incomes earned from Public Treasury Bonds, Public Corporation Bonds, and Development Bonds, as well as incomes from shares that meet the conditions outlined in Article 4 of Law No.21 of 2009. Additionally, small handicraft businesses with fewer than three employees, incomes earned by companies operating in the fisheries, agriculture, aviation, and maritime transportation industries (provided that they meet certain criteria), and incomes earned by Qatari legal residents living in the country are also exempt from taxes.
Qatar is one of the lowest tax countries in the world, with no other taxes imposed besides the Companies Tax. This feature makes the country an attractive destination for expats seeking to relocate.
The general Customs Duty for cargo entering Qatar is approximately 5%. However, for temporary imports into Qatar, approval from the General Director of Qatari Customs is required, along with a check or bank guarantee to the Customs Department for duty charges on the shipment. The duty charges will be refunded upon providing proof of export from Qatar. The usual customs clearance time for air cargo is 1-2 days, and for sea cargo, it is 2-4 days.
According to the Foreign Investment Law of Qatar, foreign investors require prior approval from the government to invest in the banking and insurance sectors. The approval process involves the Qatar Central Bank and the Ministry of Economy and Commerce, and is based on various factors such as the investor’s financial standing, the proposed business plan, and the potential impact on the Qatari economy. Once approved, foreign investors are required to comply with the regulations and guidelines of the Qatar Central Bank and other relevant authorities.
For any additional data on Qatar Labor Laws, visit https://portal.www.gov.qa/wps/entry