Income Tax in Qatar

Qatar does not have any individual/personal income tax, no sale and no wealth or capital tax. This is why Qatar is a very attractive place for many foreigners to work in. The only taxes payable are corporation tax, service tax (10%), government levy (5%) on restaurant and hotel bills. However, the payable corporate tax rates can vary from 10% to 35% depending on the income. The revenue from the personal income tax is an essential source of income of the Qatar government. The government uses the personal income tax on a different purpose. Such as- paying government employees, pension, etc.

The New Income Tax Law

The taxation system is an important part of financial policies. This is why Qatar government introduce new taxation law. The new taxation Law No. 24 & 25 of 2018 will replace Law Number 21 of 2009. The further adjustment of the law does not change the corporate tax rate. The corporate tax rate remains at 10%.

However, these new laws introduced some administrative modifications to support taxpayers for managing tax affairs. On the other hand, Law No.  25 impose some changes in the tax rate on health damaging good. It imposes 50% tax on sugary drinks, 100% on tobacco, energy drinks and alcoholic beverage. The changes made to the Income Tax Act 2018 focus on the following:

• Reform the system of administrative and procedural.
• Support taxpayers’ compliance with tax rules.
• Provide better flexibility in granting tax breaks for institutional activities in key economic areas or sector.
• Supporting growth and economic diversification, encouraging and attracting foreign investment.

The Qatar government have no intention of imposing any tax on salaries or wages of Qatari citizen.  A self-employed person may be taxed on income if he receives income from sources in Qatar.

Value Added Tax (VAT)

According to the GCC, VAT framework agreement, i.e. signed by all the states member, which includes Kuwait, Saudi Arabia, UAE, Bahrain, Oman and Qatar was impose to VAT from 1 January 2018. However, at present, Qatar does not feel the need to charge 5% VAT because the new fiscal year 2019 seems positive for Qatar.

Personal Tax in Qatar

In Qatar, there is no imposition of tax on personal income. Which means an employee can take their salary or wages without any deduction. However, the government of Qatar has introduced a new Wage Protection System. As per system, all business companies incorporated in Qatar have to pay the employee salaries in Qatari currency. The salary must be paid through the local Qatari bank account. The wages of the employee cannot be paid through the overseas bank.

Corporate Income Tax

The corporate tax rate in Qatar is 10%. However, the averaged corporate tax rate in Qatar was 17.69 % from 2006 to 2018. The tax rate reaches 35% in 2007 (all-time highest) and all-time lowest, i.e. 10% in 2010.  No income tax is imposed on the company that is owned by Qatari and GCC nationals. However, if any company that is partially or wholly foreign-owned are subjected to tax. If you establish a joint venture company, the percentage of tax depends on the percentage of shares and profits. In some specific circumstances, the tax rate may vary from 10% to 35%.

Conclusion

Qatar is one of the top-ranked economies in the world & has the lowest corporate tax rate in the world (corporate tax rate of 10%).  Therefore, it’s an excellent opportunity for foreign investors to establish a business in Qatar. Considering these facts, incorporating a company in Qatar can be more profitable than many other countries. However, lots of business sectors are tax-free, such as agriculture, health, education, etc. And you can set up a business in the Qatar financial centre, QFC.

If you finally decide to set up a business in Qatar contact S & F Consulting Firm. S & F will help you complete all the documented procedures to setup your business and incorporate it legally in Qatar.

Frequently Asked Question (FAQ)