Qatar National Vision 2030, a development plan launched in 2008 spearheaded the country’s economic diversification in non-oil sectors and brought in many changes in foreign investment policies and procedures over the years. Company formation in Qatar is mainly attractive to foreign investors due to the country’s rich economy, world-class infrastructure and one of the lowest corporate tax rates.
The Al Ula agreement reached on January 5 at the Gulf Cooperation Council (GCC)’s 41st summit removing economic and diplomatic blockade on Qatar by other GCC nations including Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt is also positive news for foreign investors.
As a foreign investor, you can only start doing business in Qatar if you have a minimum authorized share capital of USD 55,000 and at least one local Qatari partner. Private LLC companies are the most common business setups with the foreign investor owning a maximum of 49 per cent shareholding while the rest 51 per cent is held by the Qatari partner, usually a professional passive Qatari shareholder. Though restricted, the Ministry of Business and Trade may approve 100 per cent foreign ownership on a case to case basis and in certain specific sectors e.g. agriculture, health, education, tourism, IT, entertainment etc.
The business structures available in Qatar are as under
- Sole Proprietorship Company
- General Partnership Company
- Shareholding Company
- International Engineering Consultancy Office(IECO)
- Simple Partnership Company
- Limited Liability Company
- Branch Office
- Representative Office
If you don’t want a Qatari shareholder or don’t want to make any big investment either, you can enter into an agency agreement with a professional agent or distributor.
Qatar being a rich country with a high level of disposable income of its citizens, e-commerce business having only 20 per cent penetration can provide huge business opportunities to foreign investors. The internet penetration is almost 100 per cent with high-speed internet availability.
Moreover, you don’t necessarily require a permanent residence to be a partner in an online business and can even start an online business while on a business visa. The first thing you need to do is getting your business registered with the Ministry of Commerce and Industry (MOCI), the Qatar Financial Centre (QFC) or Qatar Science and Technology Park (QSTP).
Qatar Free Zone Authority (QFZA), Qatar Science & Technology Park (QSTP) and Qatar Financial Center (QFC) are the three regulatory bodies entrusted with the overall administration, management and control of QFZ.
Free zone Company formation in Qatar is fast and straightforward and provides foreign investors with several benefits including 100 per cent foreign company ownership, zero corporate income tax, no personal income tax, 100 per cent import and export duties tax exemption, entire repatriation of capital and profits and no foreign currency restrictions.
The most common form of business structure, LLC set up in Qatar involves the following steps
- Acceptance of Proposal
- Name approval and documents submission e.g. AOA etc.
- Apply for Tax Card and issuance of company stamp
- Application for computer card on receipt of trade license
- Ministry of labour registration and visa quota requirement submission for employees
- Registration with Chamber of Commerce
- Notarization at the Ministry of Justice for commercial registration
- Application for Trade License and Municipality inspection
- Corporate bank account opening, making an initial deposit
- Providing documents for office space
A branch office can have 100 per cent ownership and is not regarded as a separate legal entity and a permanent establishment. It is only permitted if you have a legal contract to perform a state project and needs to be authorised by the Ministry of Economy and Commerce and fully taxable. The process for setting up a branch office is almost similar to those required for LLC with an additional requirement of permanent tax card application within a month from the receipt of commercial registration.
Companies with 100 per cent foreign ownership including those with partial shareholding are levied with a flat rate of 10 per cent income tax on the profits generated through business activities. This corporate tax rate is lower than compared to many other countries in the world.
Payments made to non-resident entities without any permanent establishment in Qatar attract withholding tax for the companies at a 5 per cent unified rate and includes interest, royalties, technical fees, commissions, brokerage fees etc.
Companies owned by Qatari and GCC nationals are tax-exempt but need to file tax and audited financial statements if the capital exceeds QAR 2 million.
Private associations and foundations; non-profit organizations; salaries, wages, and allowances; gross income from legacies and inheritances are free of tax too.
The hiring of employees can start only after you set up your business and receive your computer card. Approval from the Ministry of Labor and Ministry of Interior is mandatory for foreign employees before signing local employment contracts. All such employees must provide an attested copy of their degree certificate to the Ministry of Labor.
Many business consulting firms can offer you help in your journey as an investor in Qatar by providing legal support and even finding professional Qatari partners for your company.
A business consultant can also organize office spaces for you through real estate brokers and as there is an increasing trend for coworking spaces in Qatar, your consultant with a local base can help you find one for huge cost savings.
Accounting services in Qatar can also be a great source of help in automating and managing your accounts, eliminating the need for internal accountants and accounting infrastructure, preparing financial statements on time, providing cost-saving suggestions and ensuring timely compliance with the regulatory requirements.
Although highly rewarding, a new business set up in Qatar is often complex with lots of regulatory requirements and complications. As financial risks may not be completely overruled, it is advised that you outsource accounting and taxation services in Qatar. Engaging a professional PRO services company with a local presence and knowledge of the society, culture and economy of Qatar can go a long way to help you cross over the initial bumps and achieve a successful business enterprise.