Business Law and the Way to Start a Business in Qatar

Like any other country, Qatar also has its own specific guidelines and requirements regarding foreign countries operating in this country. There are enough services in Qatar for legal, financial matters, tax matters, business advice, company background checks, and feasibility studies. Professional experts are available for professional advice on any of these topics.
Business Law and the Way to Start a Business in Qatar

In order to start a business in Qatar, foreign companies must first appoint a service agent/sponsor. Experts, however, say that the need for service agents/sponsors in Qatar is getting longer and may go extinct in the coming years.

The common law for establishing and operating a business in Qatar

According to Commercial Companies Act No. 5 (2002), the headquarters of an organization must be in Qatar. Firms may adopt different firms, depending on their size, relationships between participating firms, preferred structures - single, as part of a larger group, or within a holding company, and so on. However, there are usually affiliated companies that operate in Qatar:
  • Joint venture
  • Limited Partnership Company
  • Special Partnership Company
  • Shareholding Company
  • Limited Liability Company
  • Equities Partnership Company
All required documentation, conduct, procedures are described in the laws of commercial companies. In all legal agreements, the language used must be Arabic and, as always, the Arabic version will take precedence over the English translation.

Partnership Company

Commercial partnership arrangements are common in Qatar. Two or more partners are responsible for the company's liability in a partnership firm. However, in such cases, all joint partners should be Qatari, and each partner has the ability to conduct business meetings and business in the name of the company. However, it is mandatory to get approval first before proceeding with any investment.

Limited Partners

They are only responsible for the debts owed by the company or up to the amount of their registered investment. They have no management authority.
Equities Partnership Company

An equity partnership firm consists of two parties, one or more partners are jointly responsible for the company's debt on all their assets and the other includes partners.

Shareholding Company
This company was formed through a shareholding system approved by the Ministry of Economy and Commerce before its establishment. The capital of the company is distributed in exchangeable shares of equal value. There should be at least five shareholders, all of whom are Qatari.

Foreign ownership
Generally, foreign business owners and investors often form private limited liability companies (LLCs) within Qatar. In such cases, the company must have a minimum allowed share capital of QR 200,000 and two shareholders and a maximum of 30 shareholders. Foreign investors own 49% of the share capital, and the remaining 51% is in the hands of one or more Qatari partners.

The Ministry of Economy and Commerce may allow up to 100% on the shareholding of foreign investors, up to 49% on a case-by-case basis, and up to 100% on a case-by-case basis.

Some other factors, such as whether the company offers new products or installs new technology using domestic raw materials, and whether the interest of the national cadre is taken into account.
Once, it has been confirmed that the business is beneficial to Qatar and backed by industries, foreign investors or other investors are allowed to maintain a controlling stake in the company.

Read also: To find out more about company registration fees in Qatar

Some of the supported industries include agriculture, education, tourism, health, natural resource development and exploitation, energy and mining, consulting services, technical services, and IT services. The Ministry of Economy and Commerce may even exempt foreign companies from various exemptions for investing in supported industries, including income tax for 10 years, tariffs on imported equipment and equipment required for trade, imported raw materials, semi-manufactured products to produce needed products, which is not otherwise available in Qatar.

Currently, Qatar is moving forward with a law that allows full ownership of companies operating in the country. A draft law in this regard was passed last year, where foreigners own 100 percent of the business in all economic fields. Investors are allowed to have about 49 percent in listed companies or a larger partner in government approval.

Qatar tax system
Personal tax: There is no personal tax on per capita income. This suggests that employees can make their wages and payroll at home without tax deductions. However, any person who enters into any kind of commercial activity with interest in income tax is required to pay tax according to the tax law of the company.

Qatari and GCC citizens living in Qatar are exempt from income tax. The tax rate is 10 percent of the company's total state income paid annually. This fixed-rate applies only to business, and not to personal income or personal taxes.

General business expenses are deductible, and losses may be spread for a period not exceeding three years from the declaration of principal book. The term 'commercial activity' refers to any occupation, service, profession, industry, trade, imagination, contract work or business of making any profit or income. Rental income is subject to a fixed rate of 10 percent.

Tax exemption
Income tax exemption on public treasury bonds, public corporation bonds and development bonds, income from shareholding conditions as per Article 2 of Act 2 of 27, small handicraft business with less than 5 employees, income of firms working in firms, fisheries in terms of remuneration, Qatari legal people living in agriculture, aviation, and maritime transport and in the state.
There is no other tariff because Qatar is one of the top-ranked countries in the world, which makes it attractive to foreigners.

The customs duty on ordinary cargo entering Qatar is about 5%. For temporary imports in Qatar, permission is required from the General Director of Qatari Customs, excluding the customs department's check or bank guarantee, for shipping charges. It will be returned to produce proof of export from Qatar. Normal tariff clearance by air is 1-2 days and by sea 2-4 days.
In banking, foreign investors need the permission of the Qatari government to invest in the banking and insurance sectors.

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