Tax regulations

Income tax regulations in Qatari laws

Introduction:

Individuals and entities tend to research and evaluate tax regulations before entering a market, as taxation is considered an important indicator that helps gauge the strength, stability, and attractiveness of any market.

Law number (24) of (2018) promulgating a new income tax law replaced law number (21) of (2009) and has been in force since December 2018.

In this article, the author will try to highlight the main subjects of the aforementioned law, in order to give the reader a quick overview of the applicable income tax regulations in Qatar.

Tax regimes:

In Qatar, there are two tax regimes: the State of Qatar tax regime, which is administered by the General Revenue Authority (GTA), and the Qatar Financial Center (QFC) tax regime, which is administered by the ‘QFC Tax Authority.

Good news!

Unlike most other countries, wages, salaries and allowances are not taxable in Qatar. In addition, entities wholly owned by Qataris and other GCC nationalities are exempt from corporate tax, but may need to produce tax records.

Taxable income:

Corporate income is taxable and subject to a flat rate of 10% regardless of where it is incorporated, this rate is applied to entities that are fully or partially foreign-owned and derive income from Qatari sources. However, and in the case of joint ventures, the liability to tax depends on the profit shares of the foreign partner.

Companies and commercial activities related to the petrochemical industries and petroleum activities are subject to a minimum tax rate of 35%. Finally, a 5% withholding tax rate applies to non-residents for all services or royalties provided in Qatar without a permanent establishment.

Exemptions:

The law introduces many sources of income eligible for exemption, such as:

• Bank interest and returns due to natural persons who do not exercise a taxable activity in Qatar.

• Gross income from craft activities that do not use machinery, gross income not exceeding QR 200,000 per year.

• Gross income from agricultural and fishing activities.

• Gross revenue of non-Qatari air and sea transport companies operating in the state.

• Share of non-Qatari investors in the profits of companies whose shares are offered for trading on the stock exchange.

• Share of non-Qatari investors in profits from trading in all securities, including listed investment funds.

Penalties and Sanctions:

The law introduces various sanctions and penalties, such as a penalty of QR 500 per day, capped at a maximum of QR 180,000, for failure to declare income on time. In addition, failure to pay the tax due on time will result in a penalty of 2% of the amount due for each month of delay, within the limit of the total amount due.

It is essential that every taxpayer registers with the GTA (General Tax Administration) and obtains a tax card. Registration and tax cards must be renewed every year, otherwise a penalty of QR 20,000 would be imposed.

Failure to withhold tax, if applicable, results in a penalty of 100% of the tax.

Conclusion:

Law number 24 of 2018 is complex and has many details. Thus, and in order to guarantee your compliance with the provisions of this law and the various related tax regulations, specialized legal and tax advice is required.