Qatar Implements Global Minimum Tax through Law No. (22) of 2024

(A) Background and Context

In a significant move towards aligning with global tax reform initiatives, the Qatari Ministry of Justice has issued Law No. (22) of 2024, amending selected provisions of Qatar’s Income Tax Law (Law No. 24 of 2018). This amendment reflects Qatar’s commitment to implement the Global Anti-Base Erosion (GloBE) Model Rules, commonly referred to as Pillar Two, developed by the OECD/G20 Inclusive Framework on BEPS. The law was officially published on 27 March 2025 and applies to fiscal years beginning on or after 1 January 2025.

Pillar Two introduces a global minimum corporate tax rate of 15%, intended to ensure that large multinational enterprise (MNE) groups pay a fair share of tax, regardless of where they operate or are headquartered. To operationalize this, the GloBE rules employ a top-up tax mechanism that applies on a jurisdictional basis, comparing the effective tax rate (ETR) in each country with the minimum threshold.

(B) Core Components of the New Law

Covered Entities and Scope

The new law applies to Multinational Enterprise (MNE) Groups that:

Have annual consolidated group revenues of at least EUR 750 million in at least two of the four fiscal years preceding the relevant year, and

Include at least one entity or permanent establishment outside the jurisdiction of the ultimate parent entity (UPE).

Qatar's definition of MNE Groups and constituent entities mirrors the OECD GloBE Model Rules. However, Excluded Entities—such as government bodies, international organizations, non-profit organizations, pension funds, and certain investment funds—are carved out. In addition, certain holding entities owned 95% or 85% by excluded entities are also out of scope.

Income Inclusion Rule (IIR)

The IIR requires that a Qatari UPE (or another Qatari constituent entity holding a direct or indirect interest) include in its tax base the top-up tax associated with the low-taxed income of foreign group members.

This mechanism ensures that if income earned by foreign subsidiaries is taxed below the 15% threshold, Qatar will impose an additional tax to bring the total up to the minimum level. The allocation of the top-up tax follows a top-down approach, beginning with the UPE and cascading down through intermediate entities if needed.

Domestic Minimum Top-Up Tax (DMTT)

In parallel, the law introduces a Domestic Minimum Top-Up Tax (DMTT) applicable to Qatari constituent entities. This rule ensures that income generated in Qatar is also taxed at a minimum effective rate of 15%, even if the standard corporate tax rate or available incentives result in a lower effective tax outcome.

The DMTT ensures that tax revenue on Qatari profits remains in Qatar, preventing other jurisdictions from levying top-up taxes on these profits under their own IIR rules.

(C) Compliance Requirements and Penalties

The law empowers the Council of Ministers to issue detailed implementing decisions, which will address:

Registration processes for IIR and DMTT.

GloBE Information Returns, including details on the filing entity and jurisdictions involved.

Top-up tax returns under both IIR and DMTT regimes.

Failure to comply with these obligations will trigger financial penalties as follows:

Late filing of required returns: QAR 500 per day, capped at QAR 180,000.

Late payment of top-up taxes: 2% of unpaid amount per month, capped at 100% of the tax due.

Violation of registration/notification requirements: fixed penalty of QAR 20,000.

However, the law provides a transitional relief regime: For fiscal years beginning on or before 31 December 2026 (excluding those ending after 30 June 2028), penalties may be waived if the MNE Group demonstrates that it took reasonable measures to understand and implement the rules in good faith, including setting up appropriate systems and controls.

(D) Link to OECD Framework and Current Status

While the law adopts the substance of the GloBE Model Rules, its recognition as a “Qualified IIR” and “Qualified DMTT” by the OECD remains pending. As of the OECD’s latest central record of transitional qualified status (dated 13 January 2025), Qatar has not yet been granted qualified status for its IIR and DMTT rules.

This recognition is critical because:

It determines priority in applying top-up taxes under the GloBE rules (i.e. DMTT takes precedence).

It prevents other jurisdictions from applying their own IIR on profits that should be covered by Qatar’s DMTT or IIR.

It ensures coordination and tax certainty for MNE Groups.

The current law does not include a UTPR (Under Taxed Profits Rule)—the backstop mechanism under Pillar Two that allows other jurisdictions to impose tax where no qualified IIR exists. It remains to be seen whether Qatar will introduce such a provision in future updates.

(E) Next Steps and Recommendations for MNEs

Multinational groups with operations in Qatar should immediately begin preparing for compliance with the new regime, including:

• Reviewing group structures and understanding where low-taxed income may arise.
• Assessing effective tax rates in Qatar and other jurisdictions.
• Updating internal systems to capture GloBE-compliant data and reporting metrics.
• Monitoring further developments, especially on Qatar’s recognition status and expected guidance from the General Tax Authority (GTA).

Given the complexity and global interdependencies involved, proactive preparation is crucial to mitigate tax risks, avoid double taxation, and meet compliance deadlines.

Need assistance?

Our team is ready to help you assess your exposure, model top-up tax outcomes, and prepare for the evolving compliance landscape under Pillar Two.