Ahmed Ahmed KhaledKhaled Al Al GhanimGhanim & Partner& Partner

chartered accountantschartered accountants

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SECTION CONTENT PAGE

1 Taxation - Overview 4

2 Tax Exemptions 6

3 Company Taxation 8

4 Allowable Deductions 9

5 Tax Losses 10

6 Tax Rates 11

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6 Tax Rates 11

7 With Holding Taxes 12

8 Tax Registration 13

9 Accounting Period 13

10 Filling Tax Returns 14

11 Personal Taxation 15

12 Taxation on QSTP entities 16

13 Key Contacts 17

Current tax rules in the State of Qatar are governed by Law No 2 of 2009, which came

in to force with effect from January 2010. the executive regulations, effective from 01

July 2011, contain the detailed rules related to the administration of the tax system.

The Public Revenues and Tax Department (PRTD) is the responsible authority for Qatar

taxation issues circulars to provide guidance on the interpretation of provisions in thetaxation issues circulars to provide guidance on the interpretation of provisions in the

Qatar tax law and its application.

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The provision of the tax law do not apply to the following areas;

�Private Associations and Foundations and Private Foundations of Public Interest.

�Non profit organizations registered in Qatar or registered in another State and

authorized to operate in Qatar.

�Salaries, Wages and Allowances.�Salaries, Wages and Allowances.

�Gross income from legacies and inheritances.

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The following items of income will be exempted from Tax

� Gross income of Qatari natural persons resident in the State, including their shares in

the profits of legal persons.

� Gross income of legal persons resident in the State and wholly owned by Qatari

nationals.

� Bank interest and returns due to natural persons other than those carrying on a

taxable activity in the State, whether or not resident in the State.

� Interest and returns on public treasury bonds, development bonds and public

corporation bonds.

� Capital gains on the disposal of real estate and securities derived by natural persons

provided that the real estate and securities disposed of are not part of the assets of a

taxable activity.

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� Dividends and other income from shares if the amounts distributed during a taxable

year were taken from profits that are subject to the tax.

� Gross income from handcraft activities that do not use machines provided that the

gross income does not exceed one hundred thousands (100,000) Riyals per year, the

average number of employees does not exceed 3 during the taxable year and the

activity is carried on in one single establishment, in accordance with the limits andactivity is carried on in one single establishment, in accordance with the limits and

conditions provided for in the executive regulations of this law.

� Gross income from agricultural and fishing activities.

� Gross income of non Qatari air and sea transport companies operating in the State,

subject to reciprocity.

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An annual tax is imposed on tax payer’s taxable income derived from local sources

during the taxable year.

Income derived from local sources include the followings;

�Gross income derived from an activity carried on in Qatar.

�Gross income derived from contracts wholly or partially performed in Qatar.

�Gross income from real estate situated in the State including the sale of shares in

companies or partnerships, the assets of which consist mainly of real estate situated in

the State.the State.

�Gross income from shares in companies resident in the State or listed on its stock

markets

�Consideration for services paid to head offices, branches or related companies

�Interest on loans obtained in the State.

�Gross income from the exploration, extraction or exploitation of natural resources

situated in the State.

�Gross income subject to tax in the State under a double taxation agreement.

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Deductions are available for expenses in revenue nature rather than in capital natureincurred in generating the income.

The deductible expenditure include the followings;

� Cost of raw materials, consumables and services required for carrying on the activity.

� Interest on loans related to the tax payer’s Qatari activities.

� Employee costs including salaries, wages, end of service benefits,.

�Rents�Rents

�Insurance Premiums

�Bad Debt expenses

�Tax Depreciation of Fixed Assets calculated in accordance with the rates specified byQatar tax law.

�Donations, gift aid and subscriptions to charitable humanitarian, scientific, cultural orsporting bodies paid in Qatar to Government Authorities or public bodies, provided thevalue does not exceed 5% of net profit in the year which the deduction is claimed.

�A branch’s share of head office expenses up to a limit of 3%of the total revenue lesssub contract costs. (1% for banks and insurance companies).

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� Tax losses can be carried forward for three years after the year in which they were

incurred. Losses cannot be carried back.

�Losses resulting from an exempt or non taxable source of income may not be

deducted.

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The tax rate shall be 10% of the taxable income of the taxpayer during the taxable

year. A different tax rate may apply to entities with Oil and Gas operations or where the

activities are carried out under an agreement with the government.

Qatar Financial Center (QFC) applied a 10% rate of tax on all business profits incurred

by QFC-licensed entities operating within the QFC.

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by QFC-licensed entities operating within the QFC.

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WITHHOLDING TAXWITHHOLDING TAX

Subject to the provisions of tax agreements, payments made to non-residents with

respect to activities not connected with a permanent establishment in the State shall

be subject to a final withholding tax as follows;

•Interest, Commissions, brokerage fees, director’s fees, attendance fees

- 7% of withholding tax on gross amount

•Royalties and Technical Fees

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•Royalties and Technical Fees

- 5% of Withholding Tax on gross amount

•Dividends - No withholding tax on dividends

Entities registered in the Qatar Financial Centre are not subject to withholding tax.

Every tax payer shall register with the Public Revenue and Tax Department (PRTD)

and submit the application for Tax Card with in 30 days from whichever is the earlier

date of obtaining commercial registration or the first day of realization of income from

the activity.

ACCOUNTINGACCOUNTING PERIODPERIOD

The duration of the first accounting period may not be less than six months nor more

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The duration of the first accounting period may not be less than six months nor more

than 18 months. In all cases, the tax shall be calculated on the taxable income of the

actual accounting period. Thereafter, each period will be 12 months in duration.

The default tax year end date is 31 December. If any tax payer want to use a different

year end date, an application may be made to PRTD to get the approval on it.

The tax payers also required to keep and maintain records, all accounting books, and

documents relating to their activities in Qatar for a period of 10years following the end

of the taxable year to which the records and documents related.

Tax payers are required to submit the tax return stating the taxable income and tax

due to the Department with in 4 months from the end of the accounting period.

The tax payers who satisfy any of the following conditions are required to submit

audited financial statements signed by a locally registered auditor together with the

tax return;

The Capital of the taxable entity in Qatar exceeds QAR 100,000

or

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or

The annual taxable income of the entity exceeds QAR 100,000

or

In the case of branch, if the Head Office is situated outside Qatar.

•The taxpayer who carries on an activity that is exempt from tax under the laws of

the State shall submit to the Department the return together with the audited

financial statements.

There are no personal taxes, social insurance or other statutory deductions from

salaries and wages paid in Qatar. However, income arising from business activities

(rent from property, consulting, etc) is taxable.

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The QSTP (Qatar Science and Technology Park) is a special zone for technology

research based companies. QSTP entities can apply full exemption from corporate

income taxes and can import good and services free of customs duties. However,

QSTP entities are also required to file tax returns with PRTD.

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Old Ghanim Ibin Manik Street,

Building No 01, Floor No 03,

Office No 305

Doha,Qatar

Tel: + (974) 44350022

Fax: + (974) 44312221

E-mail:

sangeeta@agpca.com

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sangeeta@agpca.com

dayana@agpca.com