Corporate Tax Structuring in Qatar: Optimize Your Business Setup
With the economy of Qatar becoming more regulated and compliance-driven, corporate tax planning and corporate tax structuring are no longer an option for foreign and local businesses, but rather they are a must to ensure compliance and profitability. Being aware of the corporate income tax to withholding tax rules helps businesses to structure themselves accordingly, which in turn results in significant savings and risk reduction.
Key Rules and Tax Rates in 2025
The tax landscape in Qatar can be understood with the following concepts:
- Corporate Income Tax: Qatar imposes a standard corporate income tax rate of 10%, under its State and Mainland Regime, on the net taxable income of most of the foreign or partly foreign-owned companies on the income earned from Qatar.
Important Note: These rules primarily apply to companies under the Mainland State Regime. The Qatar Financial Centre (QFC) operates with some differences, so specifics vary for entities registered there. Additionally, Withholding Tax (WHT) at 35% applies only under the State Regime.
- Special Rates: Qatar imposes an additional tax at a special rate of 35% on companies engaged in the petroleum, oil, natural gas and petrochemicals industries, which, as per the regulations of existing government agreements.
- Exemptions: A company that is wholly owned by Qatari nationals or by nationals of countries who are members of the GCC and residing in Qatar will be exempt from corporate income tax in normal circumstances, subject to possible registration, reporting or audit requirements.
- Withholding Tax: Certain payments made to non-residents for services, royalties, interest, technical fees, and similar payments would be liable to a withholding tax of 5% in many cases if the non-resident taxpayer does not have a Permanent Establishment (PE) in Qatar.
- Global Minimum Tax: Qatar, through Law No. 22 of 2024, which is effective for accounting periods commencing on or after January 1, 2025, has now implemented a global minimum tax (OECD Pillar Two) for multinational enterprises, with a minimum effective rate of tax of 15% on multinational enterprises that fall within the scope of the legislation (V2) and law.
What is Corporate Tax Structuring and Why Does It Matter?
Corporate tax structuring is the process of restructuring the legal structure of a company, the ownership, finances, operations, and intercompany arrangements in compliance with the laws and regulations to ensure tax efficiencies. Good structuring allows for:
- Mitigating exposure to CIT
- Mitigating or eliminating unwanted WHT
- Accessing available exemptions (for example, for GCC or Qatari ownership)
- Ensuring compliance with transfer pricing, double tax treaties, and global tax compliance rules
- Possibly avoiding audit risk, penalties, and reputational harm.
Tax planning for corporations means planning ahead, and making decisions regarding legal form, ownership/shareholder mix, jurisdictional structuring, profit allocation, etc.
Key Elements of Effective Tax Planning for Corporates in Qatar
Here are the primary levers the tax planning companies or advisory firms can assist you with when doing tax planning for corporates:
Ownership and Shareholder Structure
If possible, you may be able to structure the ultimate beneficial owner majority ownership by GCC or Qatari nationals. This could result in exemptions from tax. Alternatively, Free Zones or QFC (Qatar Financial Centre) provide another regime or incentive.
Entity Type & Permanent Establishment (PE) Risk
Tax implications arise from branches vs subsidiaries. Subsidiary profits may be taxed differently, while branches could expose you to permanent establishment tax implications. Avoid a permanent establishment in Qatar, by not employing dependent agents or by staying longer (e.g., >183 days), etc.
Intercompany Agreements & Related Parties
Make sure your intercompany agreements reflect arm’s length pricing where applicable. Ensure service agreements, royalties, etc., are documented if a non-resident and related entity is providing the service. Financing structured royalty/service fee flows, it is necessary to consider withholding taxes and to determine if there are PE or fixed establishments.
WHT (Withholding Tax) Relief
Make sure you are capturing what payment will be subject to WHT (e.g. interest, royalty, technical and professional services, etc.)
- Use double tax treaties if they apply.
- Use of Deductions, Allowances, Exemptions
Make sure to properly document the allowable expenses that should be captured: depreciation, employee, and related costs, rent, insurance, etc.
Compliance with Filing & Audit Obligations
Registering with the Dhareeba platform and acquiring a tax card from the General Tax Authority (GTA) in accordance with the timeframes prescribed. Submitting audited financial statements with the tax return within four months from the end of the financial year for most entities within the GTA regime; six months for entities within the Qatar Financial Centre (QFC).
FAQs
Corporate Income Tax applies to the net taxable profits of a company above an amount derived from Qatari sources (for foreign-owned or partly foreign-owned entities). The basic applicable rate for CIT is 10% and 35% for the oil and petrochemicals sector.
Withholding tax applies as tax withheld at source on certain categories of payments made to non-residents, i.e., royalties, technical service fees, interest and commissions. The WHT rate is typically 5% unless a treaty states otherwise. WHT facilitates tax collection on payments to non-resident taxpayers.