Individuals and entities tend to research and assess tax regulations before entering into any market, as taxation is considered an important indicator that helps in evaluating any market’s strength, stability and attractiveness.
Law number (24) of (2018) to promulgate a new income tax law replaced Law number (21) of (2009) and is effective since December-2018.
In this article, the writer will try to highlight the main topics of the aforementioned Law, to give the reader a quick overview of the Income Tax regulations applicable in Qatar.
In Qatar, there are two tax regimes: the state of Qatar tax regime, which is administered by the General Tax Authority (GTA), and the Qatar Financial Centre (QFC) tax regime, which is administered by the QFC Tax Authority.
Unlike the majority of other countries, salaries, wages and allowances are not taxable in Qatar. In addition, entities completely owned by Qataris and other GCC nationalities are excluded from corporate income tax, but may to need file tax records.
Corporate Income is taxable and is subject to a flat rate of 10%, regardless of the place of its incorporation, this rate is applied on entities that are totally or partly foreign owned and earn income from Qatari sources. However, and in the case of joint ventures, the tax liability depends on the profit-shares of the foreign partner.
businesses and business activities linked to petrochemical industries and petroleum activities are subject to a minimum of 35% tax rate. Last but not least, a 5% withholding tax rate applies on non-residents for any services or royalties provided in Qatar without a permanent establishment.
The Law introduces many sources of income that qualify for exemption, such as:
- Bank interest and returns due to natural persons who do not carry out a taxable activity in Qatar.
- Gross income from handicraft activities that do not use machines, whereby gross income does not exceed QR200,000 per year.
- Gross income from agricultural and fishing activities.
- Gross income 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 in the stock market.
- Share of non-Qatari investors in profits derived from trading all securities, including investment funds that are listed for trading in the stock market.
Penalties and sanctions:
The Law introduces various sanctions and penalties, such as a penalty of QR500 per day, capped to a maximum of QR180,000, in the case of failure to file a tax return by the deadline. Moreover, the failure of paying tax due by the deadline will result in a penalty of 2% of the amount due for every month of delay, up to the total amount payable.
It is essential for every taxpayer to register with the GTA (General Tax Authority) and get a tax card. Both the registration and tax cards must be renewed yearly, otherwise a penalty of QR20,000 would be imposed.
Failure to withhold tax where required results in a penalty of 100% of the tax.
The Law number 24 of 2018 is complex and consists of many details. Thus, and in order to guarantee your compliance with the provisions of this law and to different relative tax regulations, a specialist legal and tax advice is required, an advice and assistance that we are always willing to help you with at Al-Hababi Law Firm.