If you are considering setting up a business in Qatar, this helpful guide outlines the whole process including tax, admin, employment laws, and more.
Political and economic stability, high-quality infrastructure, and one of the lowest corporate tax rates in the world (10%) are some of the good reasons for setting up a business in Qatar. Besides, the government has an ongoing development plan – the Qatar National Vision 2030 – which aims to transform the country into an advanced society capable of achieving sustainable development by 2030. Qatar is investing around 200 billion dollars to achieve this goal, and you can benefit from it.
Although hiring an experienced lawyer or consultancy company is highly advisable when setting up a business in Qatar, this helpful guide offers some basic information. It includes the following topics:
The business landscape in Qatar
Home to over 85 different nationalities, Qatar consistently ranks as one of the top economies in competitiveness and innovation. With a dynamic economy, the country can offer your business many opportunities to grow. Although the process of setting up a business there is fairly complex and financially risky, you needn’t let this put you off.
Many people have already developed successful businesses in Qatar, and new operations are encouraged by the authorities. The Qatar Financial Centre, for example, is a governmental business and financial entity that helps promote Qatar as an attractive business destination, working as a bridge between East and West. Support like this is crucial when doing business in a foreign country with such a different cultural background for Western people. Expats need to accurately prepare to succeed in a foreign business environment.
Business culture in Qatar
Your investor life in Qatar can be easier if you are polite and patient. Arabs are usually helpful and friendly if you ask for some advice, as they see this attitude as a sign of respect. However, doing business with Arabs also means that you will face hard bargaining; they are experts at it.
It’s important to know that answers like “I will think about it later”, may demonstrate that the agreement will not go further. It is better to observe with attention all the signs around you because Arabs rarely say a direct “no” to a proposition.
Opportunities in Qatar
It is highly advisable that you do extensive research about the region and your business sector. A doable business program must include a study of the market conditions, the competitors, and the forecast results. Remember that a credible plan has higher chances to attract more local support.
Although gas still constitutes Qatar’s priority for economic development, the government has been working on diversifying the economy, offering incentives to attract business, expertise, and investment from outside the country. The State aids businesses with rapid access to leading markets and suppliers; especially in the fields of tourism, manufacturing, healthcare, education, information technology (IT), agriculture, consultancy services, and other services related to sports, culture, and media.
According to the Qatari planning ministry, in the first quarter of 2019, Qatar’s inward foreign investments reached 722.6 billion Qatari riyals (U$199.7 billion), which represents 67.9% of Qatar’s total investment.
Who can start a business in Qatar?
As a foreigner, appointing a service agent/sponsor is the first step in setting up a business in Qatar. A powerful sponsor or a qualified local partner is a great weapon with official entities. After that, the foreign or local company has to obtain a commercial registration from the Ministry of Commerce and Industry (MoCI).
The Commercial Companies Law defines all the required documentation and procedures. And all legal contracts must use the Arabic language, and these versions will precede the English translation.
Foreign business owners and investors often have to form a private Limited Liability Company (LLC) to operate within Qatar. The company must have a minimum authorized share capital of QAR 200,000 and two shareholders. Generally, foreign investors can own up to 49% of the share capital, while one or more Qatari partners must hold the other 51%.
Within certain sectors, the Minister of Economy and Commerce may grant permission for foreign investors’ shareholding to exceed 49% up to 100% (if the business is compatible with Qatar’s development plans).
How to make it easier?
The most supported industries in Qatar include agriculture, education, tourism, healthcare, exploitation of natural resources, energy and mining, technical and IT services. The government may offer some incentives to foreign companies investing in these industries, such as no income tax for 10 years.
The Qatari government also offers business incubator and free economic zone platforms to attract foreign direct investment, such as the Qatar Financial Centre (QFC). Setting up a business in the QFC is easy. After you submit your application, a relationship manager will guide you through the process of registering, obtaining a license, and beginning operations.
The Qatar Financial Centre (QFC) was established in 2005 by the Qatari government, as a business platform to attract international financial services providers. Through QFC, about 670 companies are already operating – internationally and in Qatar – across different sectors; from media and sports to technology and consultancies. Entities registered on the QFC agency come from around the world (60 countries) and engage a community of more than 3,500 people, with the total assets under its management exceeding 20 billion dollars in 2018.
Companies established under the QFC responsibility can be fully owned by foreign investors. Furthermore, with QFC, there are some fees charged, such as establishment fees (around US$5,000) and annual fees (between US$500-5,000). These are used by the platform to assess the strategic fit and the benefit of your company to Qatar.
As an alternative to starting a new business, buying a business that is operating and making a profit (a going concern) can make the process more straightforward, as this doesn’t involve lodging capital, obtaining sponsorship, or registration. All you have to do is agree on a price and transfer the ownership of the business.
The legal structures for businesses in Qatar
According to Commercial Companies Law N.5 (2002), a company must have its headquarters in Qatar. Generally, the following types of companies can operate in Qatar:
This business is composed of two types of partners: 1) the joint partners, empowered to administer the affairs of the company, and responsible for the company’s liabilities; and 2) the trustee partners, who contribute to the company’s capital (their responsibilities are limited to the value of their shares in the capital). The minimum financial investment for this company is QAR 200,000.
Equities Partnership Company
An equities partnership company comprises two teams: the first with one or more partners jointly responsible for the company debts in all their assets; and the second includes shareholders.
Limited Partnership Company
This company is composed of two or more natural people from Qatar who are personally and jointly responsible for the debt of the entity. Foreign ownership is restricted to 49%. There is no minimum financial investment required.
Limited Liability Company
This structure includes a minimum of two and a maximum of fifty partners, whose responsibilities are limited to the value of the company’s shares held. Foreign shareholders are allowed to hire management and hold a limited liability company. The minimum capital required is QAR 200,000.
This company is formed through a shareholding arrangement, which must be approved by the Ministry of Commerce and Industry before the company is established. The number of shareholders should be at least five, and all of them must be Qataris. In addition, an elected board of directors will be responsible for managing the shareholding company. The capital should not be less than QAR 10,000,000.
Particular Partnership Company
A partnership company comprises two or more partners responsible for the liabilities of the company. All joint partners should be Qataris, and every partner has the power to hold commercial meetings and businesses under the name of the company. It is mandatory to first get approval before proceeding with any investment.
Freelancer or Self-employed
If you wish to be self-employed in Qatar, you must ask a company to sponsor you. It is important to note that you shouldn’t travel to Qatar to find temporary or casual work. Short-term contracts can be signed by a sponsor, however, independent freelancing is illegal. It is against the law to do any kind of paid work in Qatar without a permit from the Ministry of Labour. Sponsorship can be provided by a legally registered company or by an individual; you can approach a company as a self-employed person working as a sub-contractor.
Click here to know more : What are the types of business in Qatar?
How to start a business in Qatar as an expat
Before starting a business in Qatar, you need to evaluate what you are going to do there carefully. The reason is simple: the process can be costly and bureaucratic for expats. Besides, in some sectors, foreigners can only hold 49% of the company. The others 51% must be held by a local shareholder; it is common to hire a consultant firm to find a potential Qatari shareholder. The exception to this rule is to open your business in a free trade zone, then you can retain full ownership of the company.
Although the law does not specify a capital requirement, a minimum paid-up capital of QAR 200,000 is often suggested; this is to maximize the chances of the business prospect being approved. It is also recommended that you arrange any necessary financial aid with your bank in your home country before you leave. Banks in Qatar may be reticent to lend you money, especially if you are a newcomer to the country.
The following steps focus on registering a Limited Liability Company LLC, which is the most common form of company in Qatar:
Registering your business in the country
When you are finally ready to start things off, you must follow the steps below to be fully incorporated and run your business:
Trade a name for your enterprise. If the desired name doesn’t have a meaning in Arabic, you will have to pay an extra QAR 1,000.
Get your articles of association signed, with all the shareholders and their ownership stakes listed on it. Then, send the document to be signed by the Ministry of Justice.
Submit the name and the articles of association for your company to be issued by a Commercial Registration (CR). Your application will be submitted for review by different ministerial departments, depending on your business activities. Once your application has been approved, and all fees have been paid, you need to return to the Ministry of Economy and Commerce (MEC) to get your commercial register. Note that the CR is valid for only one year; with this document, you can finally open a corporate bank account.
Licenses and permits
After the CR has been released, you will need a Trade License, which allows you to have an office space for conducting your business activities. The MEC needs to approve this, and it is usually the hardest part of the process. Furthermore, plan your time carefully, as it can take some time to get it done.
Once your business is ready to run, it is time to hire some employees. However, to provide them with a Residence Permit, you will need a Computer Card, which is basically a document that states who is the signing authority of the company. Immigration issues the Computer Card (also known as Signature Card).
How to obtain a business visa in the country
According to the website Hukoomi, business visas allow non-Qataris to conduct business and work in Qatar temporarily. There are two types of business visas:
72-hour Business Visa: issued on arrival, this visa is extendable for a further 72 hours. People mostly use this for short-term business trips.
Business Visa: available for new expatriate workers and persons conducting short-term contractual work in Qatar. The visa is valid for a maximum of three months.
There is also the Investor Visa, for expatriates who invest in selected business ventures in Qatar. They are eligible for residency without sponsorship. Applicants must have property ownership documents, a certificate of good behavior and have a medical check-up to qualify.
Starting up an online business in Qatar
The e-commerce segment still has a lot of growing to do in Qatar, since its penetration is only 20%. However, because Qatar has a connected community and the highest income per capita in the world, the potential market for online businesses is huge. Furthermore, you don’t necessarily need a permanent residence to be a partner in an online business; you can start an online business in Qatar while on a business visa.
However, before starting your online business in the country, you must be legally registered. The steps are almost the same as for a “normal” company, however, you need to be sure that you have added the term “e-commerce activity” in your Commercial Registration (CR). Without this legal procedure, you can’t open a bank account or import products.
It is highly advisable that you use a “.qa” domain when going online in Qatar. You can find available options at domains.qa. Use a local secure payment portal, so your platform feels credible and trustworthy. Also, explore the resources available in the Ministry of Transport and Communications e-Commerce information portal.
Foreign companies opening up a branch or subsidiary
A branch office is an extension of a parent company abroad, and it can be 100% foreign-owned. However, depending on the parent company tax jurisdiction, the profits from the branch will be taxable in its home country.
Branch offices need to have authorization from the Ministry of Economy and Commerce and often need strict contracts with the government. It is better to register a subsidiary instead of a branch. If there is no trade with Qatari customers, a representative office is more recommended.
Starting up a non-profit company in Qatar
Qatari law only recognizes the following registered forms of NPOs: associations, foundations, clubs, and religious centers. The law does not recognize non-profit companies and does not mention them in the Commercial Companies Law or the legislation related to foreign investment. The law is also silent as to whether it is permissible for non-registered NPOs to operate.
Setting up an offshore company
If you are considering setting up an offshore company, i.e. one that is registered, established, or incorporated outside of your country of residence, there are several major pros and cons you should bear in mind.
Offshore incorporation is a straightforward process in all of the popular offshore financial centers and tax havens around the world. They can provide a wide range of benefits to the company and company principals.
You can read more about the pros and cons of setting up an offshore company, including privacy and reduced tax liability, in our helpful guide. This also explains how to register, establish, or incorporate your offshore business.
Administrating your business in Qatar
Nowadays, accounting software programs help you to simplify the way you manage all aspects of your business: keeping track of and managing invoices, cash flow, orders, VAT returns, budgets, tax reports, and so on. One of the most popular software programs is Tally ERP9.
You must maintain all accounting books and records for at least 5 years from the date you register the annual tax declaration (with the tax administration).
Invoices and labels
Businesses in Qatar must use Arabic as the main language for issuing invoices, service lists, and product labels. However, small quantities of products with English-only labels may pass import checks on a case-by-case basis.
Business banking in Qatar
All the largest banks in Qatar offer customers a specialized business account. However, before opening your corporate bank account, you must have your Commercial Register (CR); a document stating that you have a legal company.
First, you will open a temporary bank account. Then, with the CR in your hands, you must obtain a letter from the Ministry of Economy and Commerce, addressing the permission for opening an official business account in Qatar. The account will activate as soon as you deposit an initial amount. It takes around one to two working days to activate the account.
Taxation for businesses in Qatar
An entity that is partially or entirely under foreign ownership needs to pay taxes in Qatar. Its profits are generally subject to income tax at a flat rate of 10%. This corporate tax rate is comparatively lower than in other countries.
A withholding tax is imposed on Qatar entities’ payments to non-resident entities that do not have a permanent establishment in Qatar.
In some specific areas of business, or in a corporate entity that is under complete ownership by Qatari and Gulf Cooperation Council (GCC) nationals, the tax is free. The tax law also does not apply to the following:
private associations and foundations;
- non-profit organizations;
- salaries, wages, and allowances;
- gross income from legacies and inheritances.
There is no tax on personal per capita income, which means that employees can take home their wages and salaries without deduction of tax. However, if a person engages in any type of commercial activity to gain some income, he/she will have to pay tax. Furthermore, individual households are subject to income tax if they receive income from Qatar sources.
At present, Qatar does not impose business taxes or value-added taxes on enterprises. Goods from outside the GCC countries usually come with a tax rate of 5%, however certain products, such as tobacco, have higher tax rates. Temporary imports are sometimes tax-free.
According to the tax law, you need to prepare accounts which follow the International Financial Reporting Standards. The taxpayer must also keep and maintain records and documentation about their activities in Qatar for 10 years following the end of the taxable year to which the records and documentation relate.
The default tax year-end date is December 31. Around this time, you must submit the income tax declaration and pay any tax due within four months of the end of the accounting period; e.g. by April 30, 2019 for an accounting period that ends on December 31, 2018.
Any correspondence (e.g. tax returns, withholding tax statements, extension requests, and so on) submitted to the tax department has to be made through the electronic filing system of the tax administration system – TAS. If your company is part of the QFC, you must submit all tax returns online using the QFC Tax Portal.
Business insurances in Qatar
Business insurances are essential to protect your organization. Most of the insurance companies offer a similar portfolio of insurance products, as follows:
Liability insurance products
General Third Party Liability Insurance: indemnity for damages resulted from accidental death or bodily injury of any third party person or accidental damage to third party property.
Professional Indemnity Insurance: a special type of indemnity aimed to protect your company against the claims that a professional service provided by you caused financial harm to your client.
Directors and Officers Liability Insurance: indemnity payable to the directors and officers of a company (managers or supervisors) as a compensation for their losses or defense costs resulting from legal action against them while working with the company.
Workmen’s Compensation Insurance
According to Qatar Labour Law, all employees must have coverage under the Workmen’s Compensation Insurance (also called Employers’ Liability Insurance). This policy covers work-related accidents and occupational diseases; it also provides salary replacement and medical benefits to employees or workmen injured while employed by your business.
Property All Risk Insurance: indemnity for accidental physical loss and/or damage.
Business Interruption Insurance: indemnity for loss of revenue or gross profit following accidental damage to your property; covered under your Property All Risks Insurance policy. This policy must co-exist with your Property All Risk Insurance and cannot be on a stand-alone basis.
Product Liability Insurance
This policy protects your business against any claims of damage or injury caused by products supplied by your business. It is essential for cosmetic and medical supplies industries.
Employing staff when setting up a business in Qatar
After setting up your business and getting your Computer Card, you will be able to hire employees. It is important to note that all employees – except Qatari nationals, who only need a work permit – must have a residence visa and work permit provided by the employer; who must have an entity established in Qatar. Employers should provide foreign workers with a contract of employment. The contract may be in a second language (preferably English) so everybody understands it; however, the Arabic version is the only legally valid document that will be officially recognized by the Qatar Ministry of Labor.
The foreign employees must receive prior approval from the Ministry of Labor and Ministry of Interior before they can sign local employment contracts. Depending on the nature of the role, as part of the work permit/residence visa process, employees will need to provide an attested copy of their degree certificate to the Ministry of Labor. In most cases, the employees themselves will need to provide further information such as criminal records and employment history.
Employment rights and obligations
The Qatar Labour Law governs all employment relationships; this provides minimum standards of rights, obligations, and benefits for employees. You can find some of these rules below.
The maximum working hours allowed is 48 hours per week (8 hours per day). During the Ramadan, the working hours are shorter at 36 hours per week (6 hours per day).
The overtime must not exceed 2 hours per day unless the work is essential for preventing a substantial loss or serious accident or for eliminating or relieving the impact of a serious accident.
At the time of writing, there is no minimum wage in Qatar.
If the employee’s period of service is less than 5 years, there is a minimum of 3 weeks’ vacation per year. However, if the period of service is 5 years or more, there is a minimum of 4 weeks per year.
After 3 months of service, employees can have 2 weeks of paid sick leave per year of service.
After 1 year of continuous service, women can take 50 calendar days of maternity leave at full pay. There is no parental leave in Qatar. Furthermore, an employee under sponsorship should have permission from the sponsor to change jobs, depart from the country, rent a house, and open bank accounts. Sponsors cannot, however, retain the passports of their employees, except for any visa formalities.
Qatar has a wages protection system (WPS) whereby employers must pay their employees once a month – or every two weeks – directly into a local bank account. Some employers within the QFC also use the WPS.
Taxes and social security
Employees in Qatar are not subject to income tax, therefore, the employer has no tax deduction obligations. There are also no social security requirements, only for special cases.
Employers have to contribute to a pension fund and deduct employee contributions from the employee’s salary.
Useful websites where you can find employees
An employer who is looking for new employees for his/her company can announce available vacancies in:
Employment search engines (Bayt, Monster, Online Qatar, Gulf Talent, and so on);
Newspaper job sections (Gulf Times, and the biggest newspapers from your home country);
Recruitment agencies for Qatar (REED, Doha HR, Workabroad.ph, Global Woman Qatar, Ally International, etc.);
Support and advice when starting up a business in Qatar
If you want to start a business in Qatar, you will find many business-consulting companies who can help you. These companies may offer financial and legal support, loans and grants, marketing advice; they may even find Qatari partners for your company.
Besides, the government of Qatar set up the Qatar Financial Centre (QFC), a financial and business center designed to attract international financial services institutions and multinational corporations to the country. The QFC aims to promote Qatar as a vibrant hub for business and to provide an attractive environment for financial activities. The institute operates on international standards and provides legal support and business infrastructure for those doing business within the center. Entities within the QFC can claim 100% ownership by foreigners and can send all profits and capital outside Qatar.
Finding office space in Qatar
If you are looking for a professional space where you can set up your business, you will surely find one. Many real estate brokers can provide you with office spaces and meeting rooms for rent. On the other hand, coworking spaces are booming in Qatar, and they can offer you the resources of big businesses at a fraction of the cost.
The Qatar Financial Centre can also provide affordable office spaces, selected from a wide variety of locations. In 2019, the QFC will relocate to Doha’s brand new Financial District, Msheireb. It will offer ultra-modern buildings, with the latest in sustainable technologies.
However, if you don’t want to pay for a workspace, you can apply to use the free co-working space of the Digital Incubation Center (DIC), a division of the Ministry of Transport and Communications.
You can find more about the DIC in our guides to Business training courses and Finding office and co-working spaces in Qatar.
Business training courses in Qatar
The DIC conducts a series of training sessions on emerging technologies and business processes. Its objective is to connect the new entrepreneurs with the best training experts from the local market and overseas.
The two programs offered are the Startup Track – a program that supports potential entrepreneurs who have already a market-ready product or prototype; and the Idea Camp – a program for entrepreneurs, developers, and designers who have a great idea for a technology solution.
The DIC set up to boost ICT innovation in Qatar. It also offers start-ups free office space, technical support, and guidance, besides the exposure and public relations that come from being part of the DIC.
Here are some useful websites that provide information and support on starting a business in Qatar:
PwC Global (Doing business in Qatar: tax and legal guide)
UK Government (About exporting to Qatar)
Article source: https://www.expatica.com/