New Qatar Tax Law no.

21 of 2009
effective 01/01/2010
Law no. 21 of 2009 issued in November 2009,
effective from January 2010. This law suspended
the law no, 11 of1993 (old tax law)
Executive regulations effective 01/06/2011
Circular 2/2011 clarification on contract retention
and withholding tax effective 01/01/2010
Circular 3/2011 clarification in providing contract
information to PRTD effective 01/01/2010
Circular 4/2011 clarification on tax return filing
requirements by wholly owned Qatari/GCC
Companies and those who are exempted from
taxes effective 01/01/2010

Development in the law
All contracts executed after 01/01/2010 will be
subject to tax retention
Company incorporated in Qatar will not subject to
any retention- must have tax card
Permanent branch is not subject to retention must
have tax card
Branch registered for a particular project (temporary
project) is subject to tax retention which is 3% of
contract value or the final payment, whichever is
higher
Recent Developments
Withholding of tax to be applied on payments made
to suppliers who do not hold a tax card
Report all service providers engaged by the tax payer
who has non-Qatari share holding. (The threshold is
QR. 200,000 for services and QR. 500,000 for
contracts including services and supply of goods
Tax filing is mandatory on companies resident in
Qatar and wholly owned by Qatari/GCC nationals
Recent Developments
RESIDENT
A Natural Person who meets any of the following conditions:
1. Permanent home in Qatar
2. More than 183 days stay during any 12 month period in
Qatar
3. Center of vital interests in Qatar

A Body Corporate that meets any of the following conditions:
1. Incorporated under Qatari laws such as WLLs, QSCs, SPCs,
Establishments etc.
2. Headquarters in Qatar
3. Place of effective management in Qatar

RESIDENT AND PERMANENT ESTABLISHMENT
PERMANENT ESTABLISHMENT
1. A fixed place of business through which the business
of a taxpayer is wholly or partly carried on.
Examples:
Mine, Workshop, Building Site or Assembly Project,
Factory, Office, Branch, Quarry, Oil and Gas Well, Place
of exploration extraction or exploitation of natural
resources
2. PE also includes the activity carried on by the
taxpayer through a person acting on behalf of the
taxpayer or in his interest, other than an agent of
independent status

RESIDENT AND PERMANENT ESTABLISHMENT
PERMANENT ESTABLISHMENT
Permanent Establishment should not be confused
with the term Permanent Branch.
Permanent Branch is referred to foreign branches
established in the country to execute licensed
activity permanently.
A temporary branch is a foreign branch which is
established to carry out an exclusive project with the
government or a quasi government entity.

RESIDENT AND PERMANENT ESTABLISHMENT
1. Any entity executing taxable activity in Qatar and
does not qualify for the criteria mentioned for
resident and a permanent establishment is referred
to as non-resident or non-permanent
establishment.

Resident and Permanent Establishments are subject
to corporate income tax
Non-resident and non-PE are subject to withholding
tax

NON-RESIDENT AND NON-PE

Comparison
Resident and Permanent Establishment
Non-resident and non-
Permanent Establishment
General Indicators A Qatari tax Card
A Commercial registration
A fixed place of business in Qatar
No Tax Card
No Commercial registration
No fixed place of business
in Qatar
Tax Rate Corporate tax rate @10% on next taxable income
Petroleum activities and certain exceptional
arrangements are taxed at different rate with
maximum 35%.
5% - 7% Withholding of tax
Tax retention Rules 3% of contract value or the final payment whatever is
higher.
Applicable on temporary branches only
LLC and Permanent branches need to provide a copy
of tax card
No retention rules
Accounting and
book keeping
requirements
Financial statement and accounting in accordance
with IFRS and IAS.
Audit is mandatory
Maintaining books and records for 10 years in Qatar
No book keeping
requirement
Applies to payments made to non-residents with
respect to activities not connected to a permanent
establishment in Qatar
Applicable on all services rendered on or after
1/1/2010
5% on gross amount of royalties and technical fees
7% on gross amount of interest, commissions,
brokerage fees, directors fees, attendance fees and
any other payments for services carried out wholly or
partly in Qatar
Withholding taxes
Withheld tax amount must be paid to the Tax
Department before the 16
th
day of the month
following the calendar month of payment
Penalty of not deducting the withholding tax is equal
to the amount of withholding tax not deducted
Withholding taxes
Supplier/Contractor
Qatari Tax Card
Permanent Establishment
NO Qatari Tax Card
No Permanent Establishment
Temporary
Branches/ non
registered PEs
A company
incorporated in
Qatar; permanent
branch
Service
wholly
provided
outside Qatar
Royalties or
management
fees
Service partially
or wholly
provided in
inside Qatar
5% on
royalties and
management
fees
Double
taxation
agreement
available
No double
taxation
agreement
Service
wholly
provided
outside Qatar
Service
partially or
wholly
provided in
inside Qatar
No
withholding
tax or
retention
3% retention
on services
Retention paid
after obtaining
tax clearance
7% on commission,
brokerage,
directors, fees and
any other services
5% technical
and consulting
services
Check
Agreement
Apply
withholding
tax
Net taxable income = revenue - deductible expenses
Non-deductible expenses will require adjustments in
tax return

Taxable Income
Salaries and wages, any other benefits are deductible
only if they are paid pursuant to an employment
contract
Provision for airline tickets is not a deductible expense.
Expense is deductible when actually paid if provided
for in the employment contract
Rent Expense for employees/managers housing is
deductible only if stipulated on the employment
contract
Donations capped to 5% of the net taxable income
Entertainment/Hotel/Meals/Club/Client Gifts expenses
should be capped at 2% of the net income

Deductible expenses
Costs incurred in realizing income exempt from tax
Amounts paid in violation of law
Penalties and fines
Salaries and benefits paid to owners (major
shareholder) and owners first family

Non-deductible expenses
o Assets are divided into two groups
o One asset group is depreciated on a straight line
method
o Second group is depreciated on a reducing balance
method

Changes in tax depreciation rules
All companies registered in Qatar need to apply for a tax
card
Application must be submitted within one month of date
of commencement.
It has to be renewed as soon as it is expired
An entity filing income tax returns will need a tax card
An entity filing and remitting withholding taxes on
supplier payments will require a tax card
Withholding taxes will be deducted from the payments to
any entity not holding a tax card
WLL and permanent branches would need tax card in
order to clam retention money from the clients

Administrative issues
Comparison between new and the old tax law
New Tax law Old Tax law
Resident and
Permanent
establishment
Introduction of concept of resident and
permanent establishment
No concept of resident and
permanent establishment
Corporate tax law % except for certain activities 0% to 35%
GCC Nationals Residency is the deciding factor
Non-resident GCC nationals are subject to tax
with certain exception
Exempted from taxes
regardless where they
reside
Withholding tax Withholding tax rate is5% to 7% No withholding tax
Tax depreciation rles First group depreciated on straight line method
Second group depreciated on reducing balance
method
Straight line method for all
the assets
Contract retention Retention rules apply for temporary branches
only
No retention for permanent branches and
companies having a valid tax card
All entities having foreign
shareholders were subject
to a retention
Contract reporting
rules
Service contracts above QR.200,000 and Mix
contracts above QR.500,000 to be reported to
PRTD in 30 days
No such requirements
Anti avoidance rules Anti avoidance rules introduced None
Qatari/GCC companies
filing requirement
Tax returns filing in accordance with the law None