Sultan Hassan Al Dosari, Chairman; and Alamgir Khan, Deputy Chairman, Grant Thornton Qatar: Viewpoint

Viewpoint: Sultan Hassan Al Dosari; and Alamgir Khan

Qatar has successfully handled the effects of the embargo imposed on it by neighbouring countries since mid-2017. Authorities have presented a 2020 budget showing five years of high expenditure and a surplus of QR500m ($137.2m). Revenue is unchanged from the 2019 budget, at QR211bn ($57.9bn), while expenditure is forecast to increase by 2%. The challenge for Doha is to maintain economic activity, and to attract more investment and generate sufficient funds to support the state’s planned spending in the short term, as well as fulfil Qatar National Vision 2030.

To achieve the objective of sustainable countrywide growth, the government has adopted a number of specific measures that maintain a balance between the two conflicting objectives of boosting state revenue based on the principles of diversity and transparency, and making Qatar more attractive to investors.

To attract more foreign investment, authorities have developed an investor-friendly business environment. This was achieved through the launch of several initiatives, including the creation of a single window for investor services, providing advanced electronic services for business incorporation, identifying and streamlining procedures for licensing, the building business centres, issuing business licences and offering incentives to foreign investors.

Meanwhile, Qatar Free Zones Authority (QFZA) was established in 2018 to oversee and regulate free zones in the country, backing Qatar’s position as a global industrial and logistics centre with a dynamic economy. QFZA currently oversees two free zones, providing access to the country’s main airport and seaport. Companies registered with QFZA benefit from advantages including 100% foreign ownership, renewable 20-year tax holidays, no corporate tax, no Customs duties and no personal income tax.

Income Tax law No. 24 of 2018 also encourages foreign investment, with provisions stipulating that rates for foreign companies in the country or with a stake in local joint ventures would remain at the same level – a 10% flat rate on the profit share of foreign investors. The law also stipulates that salaries and wages of citizens and residents shall not be subject to any tax. It also grants exemptions for equity shares listed on a recognised stock exchange. At the same time, profits of bank deposits and companies working in the agriculture and fisheries sector are exempt from tax, while marine and aerial transport are exempt as well, under the principle of reciprocity.

On January 7, 2019 Amir Sheikh Tamim bin Hamad Al Thani promulgated Law No. 1 of 2019, also known as the Foreign Investment Law. This regulates the investment of non-Qatari capital in economic activity, and repeals the previous foreign investment law dating from 2000. The Foreign Investment Law allows up to 100% foreign ownership of local companies in all economic sectors, with the exception of banking and insurance. In addition, foreign investors may now own up to 49% of Qatari companies listed on the Qatar Exchange, subject to approval from the Ministry of Commerce and Industry. This percentage can be increased if approved by the Council of Ministers.

The Qatar Financial Centre (QFC) ended 2019 on a high note, recording 33% growth and with 200 firms registered on its platform. As of late 2019 there were 816 firms operating out of the QFC. It is therefore on track to reach its 2022 goal of 1000 firms.

Lastly, changes have been introduced to widen the tax scope, and the General Tax Authority (GTA) has been established to enhance revenue collection in a more transparent manner. The scope of the withholding tax regime has been extended by replacing the criteria from place of service within the state of Qatar to consumption of service. The GTA has also extended exemptions from filing audited financial statements with the tax return to a certain class of taxpayers where the head office is outside Qatar, and equity and revenue is below a specified threshold.