Qatar Income Tax Law No. 11/1993 became effective as of January 1, 1993. It imposes income tax on the taxpayer (natural persons and corporate bodies) arising from activities in Qatar, including profits from any contract executed in Qatar, profits realized from the sale of any asset of an establishment, agency commissions (regardless of whether the contract with respect to which a commission is due is executed inside or outside of Qatar), consultation fees, amounts from the sale, rent or concession of intellectual property rights, bad debts collected by the taxpayer, and net profits upon dissolution of a company.
Taxable income is determined after allowable deductions are made for interest payments, rentals, salaries and bonuses, taxes and fees (other than income tax), depreciation, losses from the sale of assets and humanitarian or scientific donations.
Revenues relating to projects in Qatar, even if executed outside of Qatar, are declared for Qatari tax purposes. Evidence that the work was implemented outside of Qatar is necessary to avoid tax liability with respect to the profits of the project.
Salaries, wages, personal bank interest and other forms of personal income are not subject to tax.
Tax is calculated on a progressive scale rising to a maximum rate of 35 percent on taxable income above QR 5 million. The tax rates are as follows:
Qatar's corporate income tax law is applicable to foreign firms operating in the Emirate, in addition to foreign equity participation in Qatari enterprises. While it is unusual for foreign equity in a Qatari business concern to be exempt from corporate income tax provisions, wholly owned foreign firms operating in Qatar may receive tax holidays.
In order to receive an exemption from paying corporate income tax of up to 35 percent of net income, a foreign firm must first negotiate this issue with the relevant government department prior to signing a contract. If it is in the government's interest, the department will raise the matter with a country's higher authorities and endorse a request. However, tax exemptions can only be granted by Emiri decree.
Regarding Law No. 11 for the year 1993, Qatari joint stock companies are not exempt from income tax provisions. The government has, however, been issuing decrees every three years that exempt Qatari joint stock companies from paying income tax. The most recent exemption was issued in 1995.
© 2000 Mena Report (www.menareport.com)
