COUNTRY

Qatar is a Middle Eastern peninsula jutting north into the Persian Gulf. The country shares a border with Saudi Arabia, and is located between Bahrain to the northwest and the United Arab Emirates to the southeast; Iran lies north across the water. The terrain is largely flat, rocky desert with shifting sands, and with salt flats around the coast. The capital city is Doha; the city is one of five ports, the others being Umm Said, Al Khor, Al Wakrah, and Ras Laffan.

Qatar has a population of just over 2.04m (as at July 2012, including expatriates). It is estimated that 40% are Arab, 18% Indian, 18% Pakistani, and 10% Iranian, with 14% making up other ethnic groups. The principal religion is Islam.

Until October 2004, Qatari laws operated on a two-tier system: Sharia law was administered at the local level, while the civil courts operated on the English model, a hangover from a period during which Qatar was a British protectorate. A new unifying law has since come into force, and the Qatari Constitution came into effect in June 2005; Islamic Sharia is the principal source of legislation.

The government of Qatar is based on a traditional monarchy, whereby the Emir (presently Amir Tamim bin Hamad Al-Thani) is head of state. The Prime Minister is Abdallah bin Nasir bin Khalifa Al-Thani and the Deputy Prime Minister is Ahmad bin Abdallah al-Mahmud.

The economy is largely centered on Qatar’s gas and oil reserves, with oil production accounting for around two-thirds of total government revenues; Qatar’s proven gas reserves are the world’s third largest. Liquefied natural gas (LNG) and oil exports make up around 85% of all exports and more than 50% of GDP. Per capita GDP is also among the world’s highest, at US$102,900 in 2012 (US Department of State figures).

Qatar is a Middle Eastern peninsula jutting north into the Persian Gulf between Bahrain to the northwest and the United Arab Emirates to the southeast. It has a population of just over 1.9m, which includes a substantial number of expats. Qatar’s economy is largely centered on is vast gas and oil reserves, with oil production accounting for around two-thirds of total government revenues. However, as with most Gulf states, Qatar is looking to reform and liberalize its economy to avoid over-reliance on hydrocarbons. The Qatar Financial Centre was established in 2005 with the aim of attracting international financial services and multinational corporations and developing the financial services industry. There are 15 banks operating in Qatar, including seven national banks, two of which operate in accordance with Islamic principles. The country benefits from excellent telecommunications. Businesses are subject to tax on income arising from activities in Qatar and there is no personal income tax as such. Investment incentives are available to foreign investors participating in joint ventures with local participation. However, foreign trading organizations are not permitted to operate on their own behalf Non-Qataris are not permitted to participate in banking, insurance, commercial agency, or real estate trading activities.

TAXATION

  • Headline tax rates: CIT 10%/35%, PIT 0%, VAT 0%
  • Treaty Jurisdictions: Algeria, Armenia, Austria, Azerbaijan, Belarus, Bulgaria, China, Croatia, Cuba, Cyprus, France, Georgia, Greece, Hong Kong, Hungary, India, Indonesia, Iran, Ireland, Isle of Man, Italy, Jersey, Jordan, Korea, Republic of, Lebanon, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Monaco, Morocco, Nepal, Netherlands, Norway, Pakistan, Panama, Philippines, Poland, Romania, Russia, Senegal, Serbia, Seychelles, Singapore, Slovenia, Sri Lanka, Switzerland, Syria, Tunisia, Turkey, United Kingdom, Venezuela, Vietnam, Yemen
  • TIEA Jurisdictions: Cayman Islands, Denmark, Faroe Islands, Finland , Greenland, Iceland, Sweden

BUSINESS

  • Suitable for: Insurance, Shipping, Aviation, Holding Companies, Property Ownership
  • Company Types: Limited companies, public limited companies, branches, general partnerships, limited partnerships and joint ventures
  • Formation Cost: 3700 – 6100 USD
  • Formation Time: 7 – 12 days
  • Maintenance cost: 1600 – 2400 USD

INCORPORATION

Qatar is a relatively restrictive country in regards to foreign investments, in that shareholdings of incorporated entities must have at least 51% shareholdings by Qatari nationals. This is built upon the initiative of “Qatarization”, which intends to place priority of employment and power for Qatari individuals over foreign nationals. As such, it may be a complex and challenging environment to incorporate in Qatar.

All foreign companies seeking to incorporate in Qatar must be established under the Foreign Investments Law No.13 of 2000, known as the Foreign Investment Law. Companies must also comply with the amendment of Law No.1 of 2010 stipulating that foreign investments may be made in most sectors in Qatar given their legal presence is registered in Qatar. There are two restrictions placed on foreign companies under the Foreign Investment Law:

Foreign ownership is restricted to a maximum of 49% of a company’s capital, where at least 51% must be owned by a Qatari partner. This restriction does not apply in certain sectors such as agriculture, industry, healthcare, education, tourism, energy or mining, and does not apply to projects that contribute to Qatar’s development plans.

Certain types of businesses are restricted, such as investments into banking and insurance which requires approval from the Council of Ministers for each individual case. Foreign investment in commercial agencies and real estate trading is not permitted.

Branch / Representative Office

Both the branch and representative office are ideal methods for businesses seeking to establish a basic, limited presence in Qatar. A branch is relevant for foreign companies who intend to carry out business activities with a specific purpose or objective in Qatar. The representative office on the other hand is a restricted business presence which only allows marketing and administrative activities to be conducted. For both methods, ministerial approval from the Ministry of Economy and Commerce is required when applying for a branch contract or a representative office license.

Branch

A foreign company may open a branch in Qatar only if the company is awarded a contract by the Minister of Business and Trade for a project that contributes to public service or interest. Establishment of the branch office is governed by Article 3 of the Foreign Investment Law. The business must obtain a license to operate for the specific purpose and duration of completing the contract, and will expire once the terms of the contract have been fulfilled.

The projects that are approved for branch establishment must be approved by the Ministry of Business and Trade.  Business activities of the branch must adhere to the contract and in most cases are fully taxable. In addition, branches are considered the same entity as the foreign owner. Qatarization laws apply to branches, which give an advantage to Qatari businesses over foreign companies.

Representative Office

As of 2006, foreign entities may establish a Representative Trade Office (RTO) in Qatar with 100% foreign ownership. The representative office must not conduct financial transactions related to the company’s commercial activities in Qatar, and all functions are limited to marketing and administrative activities.

Some activities which a RTO may perform include:

  • Contacting clients to discuss service and product offerings of its foreign owner
  • Contact exporters and sellers of materials and removing barriers to transporting these materials
  • Administrative functions of handling product complaints and issues with distribution

A representative office is similar in nature to a branch, where a license application must be lodged to the Ministry of Business and Trade. Like a branch, the RTO is not considered as a separate legal entity may be fully owned by the foreign entity.

Processing Time: 4-8 weeks

Limited Liability Company

The Limited Liability Company (LLC) is one of the most popular methods of incorporation for foreign investors as it requires a relatively small amount of capital and can be established quickly. LLCs are appropriate for many types of foreign businesses in Qatar, although are restricted from engaging in banking, insurance or investment activities for third parties. A newly incorporated LLC is considered as a separate legal entity.

Liability

Limited Liability: Liability of each shareholder is only limited to the capital they have invested in.

Minimum Ownership

There is a maximum foreign ownership cap of 49% for most business entities in Qatar except for certain sectors. Protective provisions may be implemented to preserve the foreign owner’s power over the LLC at the discretion of the Ministry of Business and Trade, such as the right of more than 49% of the company’s profits.

Number of Founding Members

2 to 50

Minimum Capital Requirements

Traditionally QAR 200,000 and a sufficient amount to accomplish the company’s objectives. Under the current Commercial Companies Law, no minimum capital is specified.

The company may not raise additional capital via public subscription.

Procedure

The procedure of incorporating a company as a LLC is as follows:

Reserving a company name

The founding partners must submit an application for New Company Registration and an appropriate company name to the Commercial Registry and Trademark Department at the Ministry of Economy and Commerce. The company name availability check, reservation and payment can be completed online. Fees differ for Arabic and non-Arabic company names.

Time: 1 day

Cost:

Arabic name: QAR 1000

Non-Arabic name: QAR 1500

Opening bank account and minimum capital deposit

The founding members must open a bank account at a banking institution and the start-up capital must be deposited. A confirmation is then sent from the bank of the deposit, and this amount cannot be withdrawn until incorporation.

Time: 1 day

Cost: No charge. Minimum capital must be available.

Authenticate the articles of association

The articles of association for the company must be submitted in Arabic in the format of the Ministry of Justice. The official document must be stamped by the Commercial Companies Control Department so that the parties may sign it at the Authentication Department. This is a one-stop-shop authentication process where all relevant signatories must be present.

The articles of association include:

  • Company name, “with limited liability” appended
  • Company location
  • Objectives of the company
  • Fixed term of duration
  • Start-up capital
  • Restrictions on the transfer of shares
  • Names of all shareholders
  • Distribution of profits/losses between shareholders
  • Name of persons related to company management
  • Capital structure

Any shareholders who are business entities must provide these documents to the Ministry of Justice prior to signing the Articles of Association:

  • Legalized and authenticated Board/Shareholders Resolution approving incorporation of the company and appointment of representative to sign the Articles of Association
  • Legalized and authenticated Certificate of Incorporation
  • Legalized and authenticated Articles of Association of the entity
  • Passport copy of the authorized representative

Register with the Commercial Registry and the Chamber of Commerce and Industry

The founders must register with the Commercial Registry and the Chamber of Commerce and Industry via the one-stop-shop at the Ministry of Economy and Commerce. The following documents must be submitted:

  • Completed and signed application form by the managers and representatives
  • Chamber of Commerce authorized signatories form
  • Authenticated articles of association
  • Copies of authorized signatories’ ID cards

Time: 1 day

Cost:

Chamber of Commerce registry: QAR 2,200

Commercial Registration: QAR 500 – QAR 5000

Obtaining trade and signage licenses from the Municipality of Doha

A Trade License must be obtained through submitting the following documents:

  • Commercial Registration Certificate
  • Signed lease agreement translated to Arabic
  • Picture of the premise
  • Copy of the title deed

A Signage License must be obtained through submitting the following documents:

  • Sketch of the logo that will be placed on the office entrance, including size and name of company in Arabic and English
  • Picture of the premise’s exterior

The Municipality of Doha sends inspectors to the premises of the company before granting the Trade License.

Time: 1 day

Cost:

Trade License: QAR 10,020

Signage License: QAR 50 – 150 per square meter

Registry of taxes and obtaining a Tax Identification Number (TIN)

Registration of taxes is done through the Tax Department of the Ministry of Finance. The following documents must be submitted:

  • Articles of Association
  • Copies of the ID cards of the company founders and partners
  • The Commercial Registration of the company
  • Trade License
  • Certificate of the company premise’s registration
  • Certificate of appointment of the company auditors

Once the business obtains a trade license, the company may commence business operations, but the registration of taxes must be lodged at the Tax Department within one month of incorporation.

Time: 1 day

Cost: no charge

Company Seal

A company seal must be made for the use of stamping documents prior to submission to governmental agencies.

Time: 2 days

Cost: Average of QAR 150

Advantages

  • Shareholders’ losses are limited to their initial investment
  • Partners may divide profits disproportionately to their shareholdings
  • One of the cheaper and faster methods of incorporation

Joint Stock Company

A joint stock company can be formed with a minimum of five members. Each member may contribute negotiable shares, and have a limited liability to the extent of their investments. Joint Stock Companies (JSCs) incorporated in Qatar must have all Qatari shareholders, while non-Qatari members may subscribe in capital, particularly those who have foreign capital or foreign expertise.

Liability

Limited Liability.

Minimum Ownership

JSCs must have 75% minimum ownership for Qatari nationals.

Number of Founding Members

At least 5.

Minimum Capital Requirements

Public JSC: QAR 10,000,000

Private JSC: QAR 2,000,000

Process

  • Drafting of a memorandum and articles of associations, submitted to the Minister of Economy and Commerce.
  • The documents must be signed by at least five founders.
  • The incorporation is subject to authorization by decree, published in the official gazette.
  • Founders must present a bank certificate proving the subscription of between 10 and 20% of subscribed capital to the Companies Control Department in the Ministry of Economy and Commerce prior to public subscription.
  • Documents must include the company’s trade name, head office, objects, details of members, amount of capital, number and classes of shares, duration and assessment of establishment expenses.
  • At least one auditor must be appointed.
  • The company’s management is determined by a board of directors of between 5 and 11 members.

Partnership

A partnership may come in the form of a General Partnership or a Limited Share Partnership Company. The General Partnership is an arrangement where two or more founding members engage in commercial activity in Qatar. Both partners have unlimited liability and the trade name will reflect the names of the partners. In Limited Partnerships, there are one or more joint partners and at least four trustee shareholding partners. The limited partners have a limited liability to only what they have invested, while the joint partners have unlimited liability.

Liability

General Partnerships have joint and unlimited liability for any general partners.

Limited Partnerships have limited liability for the limited partners and joint and several liability for general partners.

Minimum Ownership

There is a maximum foreign ownership cap of 49% for most business entities in Qatar except for certain sectors. At least 51% of the partnership shareholdings must be by a foreign national.

Number of Founding Members

At least 2.

Minimum Capital Requirements

No requirements for minimum capital for General Partnerships.

Minimum share capital of QAR 1,000,000 for Limited Share Partnership Companies.

Procedure

The procedure of incorporating a partnership is as follows:

Reserving a partnership name

The founding partners must submit an application for New Company Registration and an appropriate partnership trade name reflecting the main partners to the Commercial Registry and Trademark Department at the Ministry of Economy and Commerce. The partnership name availability check, reservation and payment can be completed online. Fees differ for Arabic and non-Arabic company names.

Time: 1 day

Cost:

Arabic name: QAR 1000

Non-Arabic name: QAR 1500

Opening bank account

The founding partners must open a bank account at a banking institution. Minimum share capital is not required to be deposited for partnerships.

Time: 1 day

Cost: No charge

Authenticate the articles of association

The articles of association for the company must be submitted in Arabic in the format of the Ministry of Justice. The official document must be stamped by the Commercial Companies Control Department so that the partners may sign it at the Authentication Department. This is a one-stop-shop authentication process where all relevant signatories must be present.

The articles of association include:

  • Company name
  • Company location
  • Objectives of the company
  • Fixed term of duration
  • Start-up capital
  • Restrictions on the transfer of shares
  • Names of all shareholders
  • Distribution of profits/losses between shareholders
  • Name of persons related to company management
  • Capital structure

Any shareholders who are business entities must provide these documents to the Ministry of Justice prior to signing the Articles of Association:

  • Legalized and authenticated Board/Shareholders Resolution approving incorporation of the company and appointment of representative to sign the Articles of Association
  • Legalized and authenticated Certificate of Incorporation
  • Legalized and authenticated Articles of Association of the entity
  • Passport copy of the authorized representative

Register with the Commercial Registry and the Chamber of Commerce and Industry

The founders must register with the Commercial Registry and the Chamber of Commerce and Industry via the one-stop-shop at the Ministry of Economy and Commerce. The following documents must be submitted:

  • Completed and signed application form by the managers and representatives
  • Chamber of Commerce authorized signatories form
  • Authenticated articles of association
  • Copies of authorized signatories’ ID cards

Time: 1 day

Cost:

Chamber of Commerce registry: QAR 2,200

Commercial Registration: QAR 500 – QAR 5000

Obtaining trade and signage licenses from the Municipality of Doha

A Trade License must be obtained through submitting the following documents:

  • Commercial Registration Certificate
  • Signed lease agreement translated to Arabic
  • Picture of the premise
  • Copy of the title deed

A Signage License must be obtained through submitting the following documents:

  • Sketch of the logo that will be placed on the office entrance, including size and name of company in Arabic and English
  • Picture of the premise’s exterior

The Municipality of Doha sends inspectors to the premises of the company before granting the Trade License.

Time: 1 day

Cost:

Trade License: QAR 10,020

Signage License: QAR 50 – 150 per square meter

Registry of taxes and obtaining a Tax Identification Number (TIN)

Registration of taxes is done through the Tax Department of the Ministry of Finance. The following documents must be submitted:

  • Articles of Association
  • Copies of the ID cards of the company founders and partners
  • The Commercial Registration of the company
  • Trade License
  • Certificate of the company premise’s registration
  • Certificate of appointment of the company auditors

Once the business obtains a trade license, the company may commence business operations, but the registration of taxes must be lodged at the Tax Department within one month of incorporation.

Time: 1 day

Cost: no charge

Company Seal

A company seal for the partnership must be made for the use of stamping documents prior to submission to governmental agencies.

Time: 2 days

Cost: Average of QAR 150

Unincorporated Joint Venture

Unincorporated Joint Ventures (UJVs) involve several parties pooling resources together to jointly control and manage a project. Individual contractors and principals may engage together in a project in Qatar for several reasons:

  • The large size and capital requirements of projects in Qatar may be difficult for individual contractors to enter in. Pooling financial and managerial resources will allow these projects to be undertaken.
  • High risk projects may distribute the risk among more parties through a UJV.
  • A UJV can have a single management team which combines the expertise of members.

Liability

Limited Liability.

Minimum Ownership

A UJV does not incorporate a new, separate legal entity. The allocation of liability between the participating members must be indicated in the company Memorandum. Third parties may have a right of action against individual venturers, and not the joint venture itself.

Number of Founding Members

At least 2.

Minimum Capital Requirements

No minimum capital requirements for UJVs.

Although UJVs provide many benefits, the accounting, legal and tax consequences of forming an UJV is complicated. Careful planning must be done to successfully establish a UJV. The process of incorporating a UJV is much more complex than other standard incorporation methods. Professional advice is recommended.