Important Information and Tips for Companies Operating in Qatar Regarding Taxes

Qatar is a key and encouraging destination for investment due to its advanced economic environment and legislative framework, which keeps pace with economic development. One of these legislations is the Income Tax Law, which companies operating in Qatar must comply with to avoid penalties, fines, and sanctions. Law No. 24 of 2018 was enacted to establish the Income Tax Law, along with Cabinet Decision No. (39) of 2019, which issued the executive regulations of the Income Tax Law as per Law No. 24 of 2018. This law repealed the provisions of Law No. (21) of 2009 concerning income tax. Additionally, Law No. 11 of 2022 was issued to amend some provisions of the Income Tax Law as per Law No. 24 of 2018.

Below are some essential tips and information that can help companies comply with Qatar's tax system:

1. Tax Rate: Article 9 of the Income Tax Law No. 24 of 2018 specifies the tax rate as 10% (ten percent) of the taxable income for the taxpayer during the fiscal year, with certain exemptions mentioned in the article.
2. Early Registration with the Tax Authority: All companies operating in Qatar, whether local or foreign, must register with the General Tax Authority (GTA) as soon as they commence their business activities. This includes submitting the required information about the company, its business activities, and providing the details requested by the GTA. Companies must adhere to registration deadlines and complete the necessary procedures in a timely manner. According to Article 10 of Law No. 24 of 2018, "Every taxpayer engaging in an activity or generating taxable income must: 1) register with the authority, 2) notify the authority of any changes that may affect their tax obligations, and 3) apply for a tax identification number. The regulations will define the conditions, controls, deadlines, and procedures for this."
3. Compliance with Tax Filing Deadlines: According to Article 11 of the same law, "The taxpayer, even if exempt from tax, is required to submit a declaration to the authority using the prescribed form, indicating the taxable income and the amount of tax due." Therefore, both local and foreign companies operating in Qatar must submit annual tax returns that include details on revenues, expenses, and profits. Companies must comply with the deadlines for filing these returns to avoid penalties. They should also audit their accounts periodically to ensure the accuracy of the figures in their tax declarations and to prevent any errors in revenue and expense calculations.
4. Proper Tax Planning: It is important for companies to implement appropriate tax planning strategies to maximize benefits from Qatar’s tax system. This may include examining how to allocate profits between different branches or partners in a way that reduces tax obligations. Companies may also benefit from tax exemptions, such as those available to companies working in certain sectors or strategic projects. Therefore, it is advisable to consult legal or financial advisors to determine whether any exemptions apply to your company. These advisors will guide companies toward compliance with new laws and regulations and help keep them updated on legislative changes. Additionally, they can provide advice on improving tax planning strategies to reduce the tax burden.
5. Consequences of Tax Evasion: Companies must be aware of the consequences of tax evasion in Qatar, as the state imposes severe financial penalties and sanctions against companies that fail to comply with tax laws or attempt to evade paying due taxes. Under Article 22 of the Income Tax Law No. 24 of 2018, "If the tax assessment and related financial penalties become final, and they are not paid by the specified due date, the President shall take measures to enforce seizure of the taxpayer’s assets necessary to collect the tax, whether such assets are in the possession of the taxpayer or others." Companies must ensure they submit accurate reports and data in their tax returns and avoid falsifying figures or submitting fraudulent documents. As per Article 26 of Law No. 24 of 2018, this act can lead to imprisonment and/or a fine, or both.
6. Maintaining Accurate Business Records and Financial Books: Companies are required to maintain accurate and up-to-date financial records for all business transactions, revenues, and expenses. This is crucial to ensure legal compliance and enable accountants to submit accurate tax reports. Maintaining proper financial records helps verify the tax amounts due in the event of any review or audit by the General Tax Authority.
7. Review of Double Taxation Agreements Between Qatar and Other Countries: Companies operating in Qatar with international dealings may be subject to the tax regulations governing Double Taxation Avoidance Agreements (DTAAs) between Qatar and other countries. Companies should review the specific tax agreements and ensure they benefit from any reductions or tax exemptions provided under these agreements.

In general, local and foreign companies operating in Qatar must have a thorough understanding of their tax obligations and ensure full compliance with all applicable laws and regulations.