Qatar has a relatively simple tax system compared to many other countries. There is no personal income tax in Qatar, but corporations do need to pay 10% percent of their profit share as tax. The simplicity of Qatar's taxation system makes it relatively easy to file a tax return through the Dhareeba portal, that has published by the General Tax Authority in September 2020.

But before you do that, you will need to understand the type of tax, what is deductible and what is not deductible, and what amount you need to pay.

Types of Taxes in Qatar

There are two types of Taxes under the General Tax Authority.

1. The corporate tax of 10% should be imposed on the profit share of any foreign investor doing business in Qatar. Qatari and GCC citizens are exempted from paying the tax provided that they are residents of Qatar according to the Income Tax Law 2018, its executive regulation, and its amendments.
2. Withholding tax of 5% on any service provided and destinated to Qatar. If the service is going to be exploited, consumed, and used in Qatar, then it is subject to a 5% withholding tax regardless of the location of the service provider. The payment to GTA must be transferred within 16 days following the month when the payment occurred.

Qatar Financial Center authority gives more incentives to the taxpayer by not applying the withholding tax. However, there is a corporate tax of 10% on the net profit generated by the company. Qatari citizens are only exempted if they meet certain criteria according to the QFC Tax Manual, which explains in detail the tax structure.

Qatar Free Zone jurisdiction gives incentives to taxpayers for a period of 20 years by exempting them from paying corporate tax. However, these companies are still requested to submit audited financial statements by an accredited auditor listed by QFZ.

Value-Added Tax (VAT)

Currently, there is no VAT applicable for any purchase you make in Qatar.

Custom Duties

If you import goods from outside the GCC countries, you will have to pay a 5% customs duty at the port of entry in Qatar. But other than that, there are no customs duties imposed on goods originating from within the GCC.

Excise Tax

Qatar does impose excise taxes on products like tobacco (100%), carbonated drinks (50%), energy drinks (100%), and any other special-purpose goods (100%).

Social Security Contribution

Finally, employers in Qatar need to cover social security and benefits. However, this only applies to employees who are Qatar nationals and not expatriates.

Corporate Tax Calculation in Qatar

When filing for your corporate tax, you should also be aware of the way the total state income is calculated for your company in Qatar. The following factors are considered.

• Any commercial activity in Qatar
• Complete or partial execution of contracts in Qatar
• Properties in Qatar
• Services provided within Qatar
• Income from loans
• Income generated offshore without having a permanent establishment in the other state, then income should be taxed in Qatar.

Hence, any income that your company accrues from these factors is considered taxable under the total state income. Apart from this, you could also be required to pay an additional tax as per the 'Double Tax Agreement.' To fully understand whether your company qualifies for this, you will need to hire a reputed tax advisor in Qatar, like HLB AG.

How can we help

Before you start your business, it is always recommended to get the advice of the auditor and tax advisor; then, they can give you a brief about the tax implications and risks. If you wait till the end of the accounting year to appoint them, then you may make several unintentional errors that may lead to a negative impact on your financial statements and tax return. Antonio Ghaleb and Partner CPA, and HLB AG will help you to understand the tax structure in any jurisdiction in Qatar and mitigate the risk of doing any transaction that doesn't comply with the rules and regulations.