Making progress: Foreign investors can enjoy various advantages in new economic zones

Despite its small size, Qatar has become a magnet for regional investment over the past decade. Foreign investment in Qatar is governed by Law No. 13 of 2000 (the Foreign Investment Law), which is applied to non-Qatari nationals who wish to undertake business in Qatar. In addition to the flexibility offered by this law, foreign investors may benefit from several incentives presented by the Qatari government.

Ownership Regulations

Foreign investors may own 100% of a company’s capital in selected sectors by registering through: (i) the Qatar Financial Centre (QFC) under Law No. 7 of 2005, a financial and business centre established in 2005 by the government of Qatar, or (ii) the Qatar Science and Technology Park, a free zone established in 2004 under Law No. 36 of 2004 for technology-driven firms.

Moreover, the concept of economic zones is being introduced to Qatar through the Economic Zones Company (EZC), a shareholding company which was established by the minister of business and trade of Qatar under decision No. 272 in 2011. EZC is owned by the Qatari government and is represented by the Qatar Authority for Small and Medium-Scale Enterprises, and has already started working on three economic zones in and around the capital of Doha.

These zones are expected to provide a boost to foreign investments in Qatar. By setting up businesses and operating within the economic zones, non-Qatari investors would benefit from various advantages, which include: (i) full ownership in the free zone-based company, (ii) being released from any obligation to take on a specified quota of Qatari employees, (iii) conducting tax-free operations, (iv) importing goods and services relating to the business without paying Customs duty, (v) benefitting from streamlined processes and from a single window for all administrative queries.

Qatar is also witnessing a tendency towards unifying applicable legislation and harmonising it with international norms. Since the establishment of the QFC in 2005, the financial services sector in Qatar has been subject to the supervision and regulation of two separate and distinct jurisdictions comprising the laws of the State of Qatar and the regulations and rules of the QFC. It therefore became vital to have a comprehensive, integrated and effective regulatory framework.

New Mandate

This idea was first announced in 2007 and consisted of combining the QFC Regulatory Authority (QFCRA), the Qatar Financial Market Authority (QFMA) and the Qatar Central Bank (QCB) into one entity for the purpose of attracting more international financial services companies.

On March 12, 2012, the first practical step towards establishing a single regulator in the country was taken when the QFCRA announced the composition of its new board of directors following their appointment by the Council of Ministers. The governor of the QCB, Sheikh Abdullah bin Saud Al Thani, has become the chairman of the QFCRA. This was followed by an even more significant step towards the same objective on December 12, 2012 when the QCB, QFCRA and QFMA welcomed the enactment of the Law of the QCB and the Regulation of Financial Institutions (Law No. 13 of 2012). This new law mandates the QCB to act as “the competent supreme authority in framing the policies for the regulation and supervision of all financial services and markets in the state”. QCB executes this role through a Financial Stability and Risk Committee established by the new law. The governor of the QCB will head the new committee and the panel will have members from the QFMA and the QFCRA, along with experts and officials from the QCB, as well as from different banks, financial services firms and insurers.

Although this does not mean that a single rulebook for QFCRA, QFMA and QCB has been reached in the country, it represents a further step towards the development of a more resilient financial sector in Qatar.