Qatar Tax Guide 2010

Transcription

1 Qatar Tax Guide 2010

2 FOREWORD For any business looking to set up in a new market, one of the critical deciding factors will be the target country s tax regime. What is the corporate tax rate? What capital allowances can we benefit from? Are there double tax treaties? How will foreign source income be taxed? Foreword Since 1994, the PKF network of independent member firms, which is administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide businesses with the answers to these key tax questions. This handy reference manual provides clients and professional practitioners with comprehensive international tax and business information for over 100 countries throughout the world. As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all the member firms of the PKF network who gave up their time to contribute the vital information on their country s taxes that forms the heart of this publication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF Witt Mares, and Rachel Yeo and Scott McKay, PKF Melbourne for co-ordinating and checking the entries from within their regions. This year s WWTG is the largest ever reflecting both how the PKF network is growing and the strength of the tax capability offered by member firms throughout the world. I hope that you find that the combination of reference to the WWTG plus assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business. Mark Pollock PKF Perth Chairman, International Tax Committee of the PKF network I

3 IMPORTANT DISCLAIMER This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. Disclaimer This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. II

4 PREFACE The (WWTG) has been prepared to provide an overview of the taxation and business regulation regimes of over 100 of the world s most significant trading countries. In compiling this publication, member firms of the PKF network have sought to base their summaries on information current as of 30 September 2009, while also noting imminent changes where necessary. Preface On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at Finally, PKF International Limited gladly welcomes any comments or thoughts readers may wish to make in order to improve this publication for their needs. Please contact Kevin F Reilly, PKF Witt Mares, Eaton Place, Suite 440, Fairfax, Virginia 22030, USA by to kreilly@pkfwittmares.com PKF INTERNATIONAL LIMITED APRIL 2010 PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION VI

5 ABOUT PKF INTERNATIONAL LIMITED PKF International Limited (PKFI) administers a network of legally independent firms. The PKF network is the 11th largest global accountancy network with over 240 legally independent member and correspondent firms which have a combined annual turnover of $1.9 billion. Located in 125 countries, the member firms of the PKF network share a commitment to providing clients with high quality, partner-led services tailored to meet each client s own specific requirements. The membership base of the PKF network has grown steadily since it was formed in Added to the sustained growth in the number of PKF member firms, this solidity has provided the foundations for the global sharing of expertise, experience and skills and the development of services that meet the evolving needs of all types of client, from the individual to the multi-national corporation. Services provided by member firms include: Assurance & Advisory Insolvency Corporate & Personal Financial Planning Taxation Corporate Finance Forensic Accounting Management Consultancy Hotel Consultancy IT Consultancy Introduction PKF member firms are organised into five geographical regions covering Africa; Latin America and the Caribbean; Asia Pacific; Europe, the Middle East & India (EMEI); and North America. Each region elects representatives to the board of PKF International Limited, which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy and business development committees also work together to improve quality standards, develop initiatives and share knowledge across the network. Please visit for more information. VII

6 STRUCTURE OF COUNTRY DESCRIPTIONS A. TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES B. DETERMINATION OF TAXABLE INCOME Structure CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES C. FOREIGN TAX RELIEF D. CORPORATE GROUPS E. RELATED PARTY TRANSACTIONS F. WITHHOLDING TAX G. EXCHANGE CONTROL H. PERSONAL TAX I. TREATY AND NON-TREATY WITHHOLDING TAX RATES VIII

7 INTERNATIONAL TIME ZONES AT 12 NOON, GREENWICH MEAN TIME, THE STANDARD TIME ELSEWHERE IS: A Angola...1 pm Argentina...9 am Australia - Melbourne...10 pm Sydney...10 pm Adelaide pm Perth...8 pm Austria...1 pm B Bahamas...7 am Bahrain...3 pm Barbados...8 am Belgium...1 pm Belize...6 am Bermuda...8 am Bolivia...8 am Botswana...2 pm Brazil am Brunei...8 pm Bulgaria pm C Cameroon...1 pm Canada - Toronto...7 am Winnipeg...6 am Calgary...5 am Vancouver...4 am Cayman Islands am Chile...8 am China - Beijing pm Colombia...7 am Costa Rica...6 am Croatia...1 pm Cyprus...2 pm Czech Republic pm D Denmark...1 pm Dominican Republic am E Ecuador...7 am Egypt...2 pm El Salvador...6 am Estonia...2 pm F Fiji...12 midnight Finland...2 pm France pm G Gambia (The) noon Germany...1 pm Ghana noon Greece...2 pm Grenada...8 am Guatemala...6 am Guernsey noon Guyana...8 am H Hong Kong...8 pm Hungary...1 pm I India pm Indonesia pm Ireland noon Israel...2 pm Italy...1 pm J Jamaica...7 am Japan...9 pm Jersey noon Jordan...2 pm K Kazakhstan...5 pm Kenya...3 pm Korea...9 pm Kuwait...3 pm L Latvia...2 pm Lebanon...2 pm Leeward Islands (Nevis, Antigua, St Kitts)....8 am Libya...2 pm Liberia noon Lithuania...2 pm Luxembourg...1 pm M Malaysia...8 pm Malta...1 pm Mauritius...4 pm Mexico...6 am Morocco noon N Namibia pm Netherlands (The) pm Netherlands Antilles am New Zealand midnight Nigeria...1 pm Norway...1 pm O Oman...4 pm P Panama am Papua New Guinea pm Peru...7 am Philippines...8 pm Poland pm Portugal...1 pm Puerto Rico...8 am Q Qatar am Romania...2 pm Russia - Moscow/St Petersburg pm S Sierra Leone noon Singapore...7 pm Slovak Republic pm South Africa...2 pm IX Time Zones

8 Spain...1 pm Swaziland...2 pm Sweden...1 pm Switzerland...1 pm T Taiwan...8 pm Tanzania...3 pm Thailand...7 pm Trinidad and Tobago am Turkey...2 pm Turks and Caicos Islands am Time Zones U Uganda...2 pm Ukraine...2 pm United Arab Emirates pm United Kingdom (GMT) 12 noon United States of America - New York City am Washington, D.C am Chicago...6 am Houston...6 am Denver...5 am Los Angeles...4 am San Francisco am Uruguay...9 am V Vanuatu...11 pm Venezuela...8 am Vietnam Z Zambia...2 pm X

9 Qatar QATAR Currency: Qatari Riyal Dial Code To: 974 Dial Code Out: 00 (QR) Member Firm: City: Name: Contact Information: Doha Walid Saadi A. TAX PAYABLE TAXATION OF COMPANIES The income tax system and filing procedure in Qatar is covered by Law No.11 of 1993, along with Tax practice directives law No.3 of Income tax is levied on partnerships and companies operating in Qatar whether they operate through branches or in partnership with foreign companies. According to Law No.9 of 1989, GCC Nationals are to be treated as Qatari citizens for income tax purposes. Qatari and GCC nationals and their corresponding wholly owned companies are not subject to income tax in Qatar. There is no personal income tax in Qatar and hence no taxes on income from salaries and wages paid in Qatar. The Law provides that tax shall be imposed on tax-payer s income arising out of any business activity carried out in Qatar (Item 1). This shall in particular include the following: 1. Profits resulting from any contract executed in the State of Qatar 2. Profits resulting from the sale of an asset of the establishment 3. Commissions due to agencies or arising out of representation agreements or commercial mediation, whether accrued inside or outside the State of Qatar 4. Fees paid for consultancy services, arbitrations or expertise, and activities of a like nature 5. Estate rents 6. Amounts realised from selling, letting or granting a franchise to use or utilise any trade mark, design, patent or copy rights 7. Bad debts retrieved by the taxpayer 8. Net profits of liquidation. Notwithstanding the provisions of item (1), bank interest and returns realised outside the State of Qatar which is due on amounts resulting from the activity of the taxpayer inside it shall be taxable. The taxable income shall be assessed as per the declaration submitted by the tax payer, provided it is acceptable to the Department. The tax shall be computed on the taxable income for every taxable year according to the following categories and percentages: Category Percentage Below QR 100,000 Nil (exempt from tax) From QR 100,001 to QR 500,000 10% From QR 500,001 to QR 1,000,000 15% From QR 1,000,001 to QR 1,500,000 20% From QR 1,500,001 to QR 2,500,000 25% From QR 2,500,001 to QR 5,000,000 30% From QR 5,000,001 and above 35% Q Qatar s new income tax law, which will come into effect in January 2010, is aimed at encouraging foreign investment. The tax will be fixed at 10% regarding the amount of the taxable income. This law will be applied to the profits achieved by companies in 2010 fiscal year. TAX EXEMPTIONS Application for tax exemption of projects is evaluated by a Committee called The Tax Exemption Committee. When considering the exemption applications, the Tax Exemption Committee shall take into account that all or some of the following requirements are met according to the Committee s discretion: 1

10 Qatar 1. The enterprise shall contribute to boosting industry, agriculture, trade, petroleum, mining, tourism, land reclamation, transports or any activities and projects needed by the country which are socially and economically beneficial, whether such projects are wholly or jointly owned by Qatari or foreign individuals, companies or firms. 2. The enterprise shall be in conformity with the targets of the economic development plan and approved by the competent government authorities. 3. The enterprise shall contribute to the development of the national economy, provided the following is taken into consideration: - The commercial benefits - The extent of integration with other enterprises - The extent of the enterprise s dependence on the production inputs available in the country - The extent of its impact on the balance of trade and the balance of payments. 4. The enterprise shall introduce modern technology. 5. The enterprise shall lead to the creation of employment opportunities for the citizens. OTHER TAXES There is no Sales Tax, no Estate Tax and no Gift Tax. B. DETERMINATION OF TAXABLE INCOME In the computation of taxable income, the accrual method of commercial accounting shall be applied. Chargeable persons wishing to use a different method shall obtain the approval of the Department in advance. Every tax-payer shall prepare his accounts for an accounting period coinciding with the taxable year. The tax-payer may, after obtaining the approval of the Department, adopt a different date for the beginning and the end of his taxable year. The accounting period might be less or more than 12 months in the following cases: 1. If the tax-payer starts his activity after the beginning of the taxable year, provided the accounting period shall not be less than six months or more than 18 months. In either case, tax shall be computed on the basis of the actual period proportionate to the taxable year. 2. In cases of liquidation, the accounting period shall be determined by the length of time the liquidation takes. 3. In cases of cessation, assignment or sale, provided that the tax-payer shall file a declaration of the result of his activities within a period of four months from the date of cessation, assignment or sale. Every tax-payer shall keep records and documents pertaining to his activity for the five years following the last taxable year recorded in the register. Q The taxable income shall be determined after deducting all expenditures and costs incurred in the realisation of the gross income, particularly the following: 1. Interest 2. Paid rents 3. Salaries, wages, gratuities and other end of service benefits including any deductions credited to the account of the gratuities on termination of the service or pensions for the saving funds and the like 4. Taxes and duties other than the income tax 5. Bad debts approved by the Department in accordance with the criteria set out by it in this respect 6. Expenses incurred for real estate maintenance and renovation, repair of machinery, tools and equipment and for the cost of spare parts 7. Losses resulting from the sale of assets 8. Assets depreciation 9. Premiums, donations, aids and subscriptions to charitable, humanitarian, scientific, cultural or sporting activities paid in Qatar to government authorities, public bodies or firms or to licensed bodies in the State of Qatar, provided that the value thereof does not exceed 5% of the taxable net profit for the same taxable year prior to making the deduction. The following shall not be regarded as deductible expenditures and costs: 1. Personal, private and any other expenses which have no connection with the taxable activity 2. Fines for offences and delays due in accordance with the provisions of this law 3. Any expenditures or losses redeemable under an insurance policy, contract or claim for compensation 2

11 Qatar 4. Exhaustion of land 5. Depreciations exceeding the original cost 6. A branch s share in the expenses of the headquarters or the main office which exceeds the rate determined by the Department out of the gross income of the branch. Should the tax-payer sustain losses for any taxable year, he may deduct them from the taxable income, subject to the following conditions: taxable year during which the losses occur DEDUCTION OF BAD DEBTS The following requirements shall be taken, totally or partially, into consideration when deducting bad debts from the taxable income: 1. The debt should have been due for at least 24 months. 2. The tax-payer should have demanded the payment of the debt by the debtor and the sponsors. 3. The settlement agreements should have culminated in failure to collect the debts. 4. The necessary legal procedures should have been met. 5. The tax-payer should prove the inability of the debtor and sponsors to pay the debt. 6. The tax-payer should have made adequate provisions to cover the value of the debt required to be written off, totally or partially. DEPRECIATION OF ASSETS The following rules shall be taken into consideration when computing the depreciation of assets: Firstly: The cost of asset under depreciation: The cost of asset means all the expenses incurred by the tax-payer in order to acquire the asset and to prepare it to become usable. Secondly: The method of depreciation: The fixed installment method shall be followed in determining the charge, of annual depreciation for the asset according to the rates stated in the following paragraph. Thirdly: Depreciation rates: The depreciation is calculated as a result of use or ordinary damage arising from the use of asset or by lapse of time in accordance with the specific rates of the following table: Buildings such as offices, houses, warehouses, hospitals and clubs 5% Roads and bridges inside the establishment 5% Storage tanks, pipelines and ports ducks 5% Furniture and office furniture 15% Plants, machinery and any mechanical devices not mentioned below 15% Cars and motorcycles 20% Lorries various sizes 20% Ships 7.5% Airplanes 25% Drilling instruments 15% General service machinery (including building and road tools, workshop machinery and work machinery, etc.) 15% Buildings and roads of service stations 5% Machinery for servicing and lubrication of service machinery 15% Trailers and carts 13% Refinery machines and pipelines (inside the refinery) and small tanks 10% Air conditioners 20% Electrical equipment 20% Computer equipment 33.33% Intangible assets such as trademarks and the like, depreciated in case of paying for its value on a straight line basis over the estimated duration of the company. Q 3

12 Qatar HEAD OFFICE CHARGES Charges of a general or administrative nature raised by a head office on its Qatar branch are allowed as a deduction subject to a ceiling of 3% of turnover less sub-contract costs. In the case of banks, the limit is 1%. The allowable ceiling for insurance companies is set at 1%. F. WITHHOLDING TAX A directive issued by the Director of Income Tax in January 1993 requires all ministries, Government departments, public and semi-public establishment and other taxpayers to withhold final payments to subcontractors until such entities present a tax clearance certificate issued by the Income Tax Department. H. PERSONAL TAX 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. Q 4

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