The Tax Legislation of Qatar was prepared to be so plain, clear, and uncomplicated. For the sake of same plainness, I intend to inform you about the taxation principles in effect in the State of Qatar without spoiling the coherence and comprehensibility.
What is the scope of income subject to taxation?
Relevant to the facility or not any income generated in Qatar; every kind of income commissions, etc. collected in or abroad Qatar; service incomes such as consultancy, arbitration, appraisement fees; rental income; moral rights income such as know-how and copyright; debt collections of previous; liquidation decision; profits of interests and banking transactions (including abroad interest, etc. of incomes earned in Qatar) are subject to taxation in Qatar.
Incomes generated abroad does not mean being tax free. In other words, it is compulsory to add the incomes generated abroad by the subsidiaries of Qatar-based companies to gross profit; and rate the tax assessment by this way. On the other hand, it is crucial to be taken into consideration that taxation is assessed corresponding to our (Turkish) corporate tax.
However, it also should not be forgotten that personal incomes’ being tax free is due to trading without establishing a company and generating an income is banned, and personal income is limited.
To whom and what rate is taxation applied?
The State of Qatar and GCC Countries citizens are tax-exempt whereas citizens who are not Qatar and GCC nationals are subject to %10 rate of tax per share of their incomes stated in 1st article. In other saying, %10 tax is applied to gross profit of foreign companies’ per share in Qatar. However, incomes of oil and natural gas sector, and related facilities are subject to tax at a rate of %35; not %10.
While dividend income is tax-exempt, capital gains are obliged to be added to the tax assessment. Likewise, Qatarbased companies’ incomes of share sales are another must to be added to the gross profit as an income composing the tax assessment. Besides, expenses reducing the tax assessment must be in compatible with company operations; and the content and qualification of expenses that can be added is stated in the related legislation.
Are there any taxes subject to the profits of company incomes, or another form of tax?
Ingeneral VAT, SCT (Special Consumption Tax), Property Tax, Inheritance and Transfer Tax are not currently applied in Qatar excluding some implementations in some exceptional cases and sectorial basis considering the ownership.
Is stoppage (deduction) applied in the State of Qatar?
With the new taxation law, stoppage has started being applied in Qatar. Within this frame, gross royalty and technical support services fees given in Qatar by a company based abroad are subject to %5; commissions interest, brokerage, contribution fees (excluding some exceptions) are subject to %7,5 stoppage. From the point of stoppage, the taxpayer is the person and/or company making the payment of tax.
What are the prominent issues to be paid attention and known about taxation?
In 4 months after the end of the financial year, it is compulsory to fill out the tax statement and submit it to the Ministry of Finance and Economy tax department. On condition of receiving approval, the deadline of submitting the tax statement may be postponed for extra 8 months. Companies having more than 100.000 Qatari Riyals profit for a financial year have to submit financial report prepared by an auditor who is authorized by the State of Qatar enclosed with the tax statement.
In the case of statement is not submitted, ministries and public institutions stop payments to taxpayers. Also, the institution my deduct the tax from taxpayer receivables if the tax has not been paid yet; and levy the taxpayers assets.
Subcontractors cannot receive final payments from the prime contractors or institutions unless they bring receipt of discharge from the income tax department. The same condition is valid for the contractors as well. Prime contractor companies have to submit the list of subcontractors, the contracts signed; and price changes of current agreements to the related department.
In addition, prime contractors, in order to make the last payment to the subcontractors, have to submit the receipt of discharge for the sake of getting certificate of release and proving that necessary controls have been done to the tax office.
Companies have to apply and have their companies registered to the Ministry of Finance and get their companies’ tax id number card.
Delay fine is monthly; %2 of the tax or 10.000 Qatari Riyals are to be paid.
The mentioned fine is calculated daily; and whichever is more is collected from the taxpayer in practice. However, the fine cannot be more than %24 of the tax. Irregularity fine starts from 5.000 Qatari Riyals.
Accounting records have to be in Qatari Riyals unless getting permission previously, whereas records are not obliged to be written in Arabic. Accounting records, deeds,