Taxation in Qatar

Qatar has become a global gateway for foreign investment due to the benefits and opportunities it provides. It is known to have one of the most lenient taxation structures in the Gulf Cooperation Council (GCC).

While people have a misconception of whether or not Qatar is tax-free, it is not true. Qatar has a territorial taxation structure in place, which means you are accountable for paying taxes only if you make money in the country. The General Tax Authority (GTA) is the tax administration that oversees the entire tax system in Qatar.

In this article, you will gain knowledge about taxation in Qatar and learn about certain terms and conditions associated with it.

Types of Taxes in Qatar

Let us look at the various taxes in Qatar. We will review the taxes levied on both foreign businesses and businesses run by GCC residents.

Income Tax

This is an annual charge on a taxpayer's total income from various sources. However, the nation does not levy any income tax on the salaries and wages acquired by GCC residents or foreign individuals.

Corporate Tax

The Qatari government taxes the profits acquired by engaging in commercial activities. The corporate tax in Qatar generally represents 10 per cent of the profit earned, but companies who indulge in oil and gas operations must pay 35 per cent. Most Qatar Free Zones provide you with a 20-year corporate tax holiday.

Withholding Tax

Introduced in 2010, a withholding tax of 5 per cent is levied on non-residents for royalties, interest, technical fees, commissions, and other service-related payments. It can be exempted if you operate through a Permanent Establishment (PE) holding a tax card or because of the tax treaties between the non-resident country and Qatar.

Excise Tax

Excise Tax introduced in January 2019 is a kind of indirect tax that targets ‘excise goods’ considered harmful to the environment and human health. Tobacco and energy drinks are taxed at 100 per cent while soft drinks are taxed at 50 per cent.

Double Taxation in the Qatar Tax System

Taxes in Qatar have been loosened up for businesses because of treaties like  “Double Taxation”.

Qatar has implemented double tax treaties with over 70 nations to ensure that the same income isn’t taxed twice, which usually happens during the import-export process.

The double taxation agreement makes it lucrative for you and other foreign investors to set up your business in Qatar.

How to file taxes in Qatar?

 Here is the step-by-step approach for filing taxes in Qatar:

1. Registration

Register your business activity with Qatar's General Tax Authority. This mainly involves obtaining a tax card which has a unique ID. This is essential for you to operate your business and file tax returns in Qatar.

2. Electronic Filing

Create a profile on the Dhareeba tax portal, an integrated electronic tax affairs system to make the entire process fast and easy.

3. Prepare Financial Statements

Hire an accountant to prepare your business's financial statements according to the International Financial Reporting Standards (IFRS). Then get the statements audited by an accredited auditor in Qatar.

4. Tax Returns

To get your corporate tax returns, submit the required documents and the audited financial statements, within four months from the end of the financial year.

5. Tax Payment

Following the submission of the documents, if you are required to pay taxes, clear them by the specified deadline to avoid fines.

Tax Deductions in Qatar

Now, you know about taxation in Qatar and the tax holidays if you set up your business in Qatar free zones like Qatar Science & Technology Park (QSTP). Let us learn about factors for which taxable income can be reduced.

1. Expenses

Companies can reduce their taxable income by excluding the expenses directly incurred to run the business activity.

2. Depreciation

You can directly remove the depreciation of your assets over time from the taxes, using specified rates permitted by tax laws. This deduction is usually done using the straight-line method.

3. Bad Debts

These can be exempted from the taxable amount if recognised by the GTA and meet certain criteria laid out by the authorities.

4. Charitable Contributions

In Qatar, people can avail of a tax exemption by donating up to 3 per cent of their average annual profit to government-approved charitable and other public organisations.

5. Interests

Interest charged on loans is deductible from the taxable amount. However, there are certain limitations regarding this such as, when the loan is between the Qatar branch and its head office/related parties.

Why Commitbiz?

Filing taxes and obtaining tax deductions in Qatar can be a tiresome and hectic process. At Commitbiz, we have tax advisors who understand the financial burden of the clients. They are well-equipped to help you with the entire process and make it a hassle-free experience.

If you are planning to opt for a taxation service in Qatar or have any queries, do contact us – we’d be happy to assist you.