Domestic
Corporate Taxes
Qatar
Scope of Income Tax
Under
Qatar’s tax legislation, any business activity
carried out in Qatar is subject to corporate income
tax. “Activity” is defined as any
occupation, profession, service, trade, or the
execution of a contract, or any other business,
that operates in Qatar with the aim of making
a profit. This includes gains realized on the
sale of a company’s assets in Qatar; agency
commission and fees paid for consultancy, arbitration
or expertise and related services; rent from property;
income from the assignment of intellectual property;
and profits realized on liquidation.
Income
from outside Qatar is not liable to corporate
income tax; however, interest and other bank income
received from outside of Qatar, but which relates
to income arising from a taxpayer’s business
activities in Qatar, is subject to taxation.
Qatar Income Tax Rates
The
corporate income tax rates are as follows:
| Income
(QAR): |
Tax
rate (%): |
| 0
– 100,000 |
0 |
| 100,001
– 500,000 |
10 |
| 500,001
– 1,000,000 |
15 |
| 1,000,001
– 1,500,000 |
20 |
| 1,500,001
– 2,500,000 |
25 |
| 2,500,001
– 5,000,000 |
30 |
| 5,000,001
and above |
35 |
A
new tax law was approved by the government on
June 17, 2009, and is expected to come into force
from January 1, 2010. It is anticipated that there
will be a new flat rate of income tax of 10%.
The
Investment Promotion Department states on its
website that the new tax law provides for a Committee
to be established, which will evaluate applications
for exempting certain projects carried out by
foreign companies.
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Qatar Calculation of
Taxable Base
The
taxable base of businesses in Qatar is their Qatari
income only, although interest and other bank
income from outside of the country, but which
is related to the income arising in Qatar, is
included in taxable income. Allowable deductions
include the following:
·
Interest expenses;
· Rent paid;
· Salaries, labor costs, and end-of-service
benefits;
· Pension funds and related charges;
· Fees and taxes other than income tax;
and
· Debts that have been written off, so
long as they have been approved by the Income
Tax Department and meet relevant accounting standards.
Non-deductible
expenses include:
·
Personal, non-business related expenses;
· Criminal and tax penalties;
· Expenses or losses recovered by way of
an insurance policy, under contract, or by compensation;
· Depreciation that exceeds cost; and
· Certain branch shares of head office
expenses that exceed limits set by the Income
Tax Department.
Trading
losses may be carried forward and set off against
future profits for a period of three years from
the end of the tax year in which the losses were
incurred. Losses cannot be carried back.
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Qatar Filing Requirements
and Payment of Tax
Tax
declarations must be filed with the Income Tax
Department (ITD) within four months of the end
of the financial period.
The
ITD can withhold payments due under contracts
where a taxpayer fails to submit the declaration
on time. The penalty for late filing and payment
is QAR10,000 per month or 2% of the tax due, whichever
is the greater. The ITD may also collect payment
from third parties, such as the taxpayer’s
debtors.
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Qatar
Withholding Requirements
Ministries,
government departments, public establishments
and other taxpayers must withhold final payments
to subcontractors until the subcontractor presents
a tax clearance certificate issued by the Income
Tax Department.
Qatar Import Duty
Import
duties are charged on goods brought into Qatar
for onward sale, as follows:
| General
items |
4% |
| Cement |
20% |
| Steel |
20% |
| Urea |
30% |
| Records
and musical instruments |
15% |
| Tobacco |
100% |
Certain staple food products, equipment, materials
and other supplies belonging to government entities
or state companies, and the personal effects of
foreign employees arriving in Qatar for the purposes
of residence, are exempt from import duty.
Goods
manufactured in Gulf Cooperation Council (GCC)
countries and imported into Qatar are also exempt
from such duties, provided they are accompanied
by a certificate of origin from the Chamber of
Commerce of the GCC.
Individual
importers must have Qatari nationality; most businesses
that import goods must be wholly owned by Qataris.
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Further information
on Qatar:
|
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