Comparison: Qatar → New Tax Law → Old Tax Law

Since 1 January 2010, many businesses operating in Qatar, as well as groups looking to invest in Qatar, are now subject to a lower headline rate of corporate income tax, and are able to benefit from a wider range of tax treaty structuring options than has previously been the case.

Qatar has introduced a number of accompanying changes to its tax regime, including a withholding tax obligation for certain types of payments made to non-residents.

Reduced Tax Rate

Previously, Qatar’s corporate tax regime consisted of a tax bracket system, under which the tax rate applying to a particular company was determined by the amount of taxable income it generated. The rates varied from 0 percent for companies earning less than QR100, 000 (US$27,473) in a particular year, to 35 percent for companies generating more than QR5, 000,000 (US$1,373,626) in the same period.

This system has now been substantially simplified—as of 1 January Companies will be taxed on their taxable profits at a flat rate of 10 percent, benefitting businesses with substantial interests and activities in Qatar. The flat rate regime will potentially reduce the tax cost of doing business in Qatar, as well as reducing the administrative burden on companies and increasing certainty regarding groups’ taxation affairs.

Other Tax Changes

Income Tax Law No. 21 of 2009 provides for various changes to the assessment, collection and compliance regimes applicable to the taxation of individuals and companies operating in Qatar. Of particular interest is Article 11 of the new tax law, which imposes a withholding tax on payments made in respect of technical remunerations (at a rate of 5 percent), as well as on certain interest, commission, brokerage, management, attendance and service fees paid to non-residents (all at a rate of 7 percent).

It is understood that the new tax law should not apply to entities established in the Qatar Financial Centre in Doha, and that such entities, being resident in Qatar, should not be considered non- residents to whom the withholding tax obligations attach.

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