As Qatar is preparing to host one of the biggest events internationally- world cup 2022- and in accordance with Qatar vision 2030, enhancing foreign investment in the country is considered of high importance to the state, consequently, a set of modern legislations have been issued and enacted since 2019.

This article will introduce a brief review and key aspects for both Law number (1) of (2019) On Regulating Non-Qatari Capital Investment in the Economic Activity issued in January 2019 and the executive regulations of the aforementioned law issued in June – 2020 by the virtue of the Minister of Commerce and Industry resolution number 44 of the year 2020.

The Law:

The New Law provides for up to 100% foreign ownership in all economic sectors, subject to special legislation governing commercial operations conducted by non-Qataris and as defined by the New Law’s executive rules. However, banking, insurance and commercial agencies are not included in this allowance. In addition, foreign ownership in listed companies on the Qatar Exchange has been increased to a maximum of 49%, subject to the approval of the Ministry of Commerce and Industry.

Overseas companies may establish a trade representation office in Qatar without a Qatari partner to promote its activities and to provide its products and services to the Qatari market. However, such an office is not permitted to import, export, or sell any product in Qatar. In addition, a foreign company licensed to provide engineering consulting services in other countries may also establish a branch with the Committee for Accreditation of Engineers and Consultancy Offices of the Ministry of Municipality and Environment without a Qatari partner.

The law mentioned new investment incentives and also kept some incentives of the previous law, such as:

  • Lands can now be allocated to foreign investors through rent or usufruct.
  • Foreign investors may be exempted from income tax.
  • Expropriation shall only be done for the public interest and in a non-discriminatory matter, a fair compensation shall be paid to the investor.
  • Exemption of customs on the following remains the same:
  1. Machinery and equipment necessary for a project.
  2. Raw and semi-manufactured goods required for manufacturing in the industry sector, that are unavailable in local markets.

In regards with dispute resolution, the law allowed investors to agree on any dispute resolution method -In accordance with current relative Laws- to resolve any issue with any party.

In case of any violation to the provisions of this law, the Competent Department is required to inform the foreign investor involved in the violation, if the investor does not correct the breach within three months, the Competent Department will revoke the license of the company and will remove it from the Commercial Registry.

The law also stipulates a penalty of up to QR 500,000 on anyone who performs or participates in an economic activity in contravention of the law.

The executive regulations:

The regulations illustrate guidance on the requirements for foreign investors with 100% foreign ownership to be eligible for the Law’s benefits, the regulations apply on

Natural persons, legal persons, and non-Qatari investment projects. For natural persons; they must not be sentenced with any final judgement in relation to a crime involving moral turpitude or dishonesty. Moreover, and for legal persons; the entity must be legally incorporated under its HQ’s country laws and its activities must be identical and suitable to its real activities. Last but not least and in regards with the investment project; the project’s activity shall be included in the Minister’s list of economic activities, based on the proposal of the Competent Department at the Ministry of Commerce and Industry (CDMCI). A description of the activity, an action plan, and a financial plan for the project must be submitted by the foreign investor. Lastly, the foreign investor must agree in writing to assume all liabilities arising from the project and commence the project within the timeframe set by the CDMCI, otherwise the approval given would be deemed revoked. Foreign investors must apply to the Ministry for permission to exceed the 49% share capital ownership level by completing a form issued by the Ministry, together with the requisite documents established by the Ministry and other relevant authorities. The application is subsequently forwarded to the appropriate authorities for approval, the ministry has 15 days to approve or deny the application and notify the parties involved, the absence of a response after the time is regarded to be an implicit rejection.

The law and the regulations consist of many articles and details that we tried to highlight briefly in this article, for further details and inquiries it would be of our pleasure to help and assist!

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