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Setting up

Business in
Qatar – 10 key
points
Contents
Foreign investment restrictions 2

Choosing the most appropriate business medium 3

Company structures 5

Commercial registration and other formalities 6

Taxation 8

Staff 9

Property 10

Commercial contracts 11

Intellectual property 12

Culture and customs 13

Simmons & Simmons 14

Offices 15
Qatar is one of the smaller Gulf states in terms of population and geographical
area, but boasts the third largest gas reserves in the world. This abundance of
natural resources coupled with recent legal liberalisation, economic
diversification and a burgeoning economy means that there are many
opportunities for investment in Qatar.

Foreign investors are welcomed and various incentives are available to attract
foreign capital including tax breaks and exemptions from customs duty. Foreign
investors can transfer their investments and profits can be repatriated as can
proceeds of sale and capital on liquidation.

Qatar is very much a market where local knowledge is key. We set out below 10
key points to consider when doing business in Qatar. Please contact Simmons &
Simmons if you would like more detailed information.

1
Foreign investment restrictions
 Foreign investors may only invest in Qatar in accordance with the provisions of the Foreign
Investment Law (Law No. (13) of 2000).

 Foreign investors may invest in all parts of the national economy (other than those set out below)
with a Qatari partner who must own at least 51% of the enterprise.

 Foreign investors may not invest in commercial agencies or, broadly speaking, real estate. Approval
from the Council of Ministers is required for foreign investment in banking or insurance.

 The Ministry of Economy and Commerce may permit foreign investors to own more than 49% and
up to 100% of a company in specified sectors, namely agriculture, industry, health, education,
tourism, and the development of natural resources, energy or mining.

 Foreign capital is guaranteed against expropriation (although the state may acquire assets for public
benefit on a non-discriminatory basis, provided the full economic value of the asset is paid for the
asset).

 A foreign company which is performing a specific contract in Qatar may set up a branch office if
the project “facilitates the performance of a public service or utility”.

 A foreign company operating in Qatar under a Qatari government concession to extract, exploit or
manage the State’s national resources is exempt from the Foreign Investment Law. In practice this
covers all the oil majors.

 A company formed by a foreign entity with the government or a government entity (an Article 68
Company) will be subject to special rules.

2
Choosing the most appropriate business medium
Establishing a company

 A company is the normal vehicle where an on-going business is being set up.

 Various exemptions are available to attract foreign capital.

n In almost all cases a Qatari partner will be required.

Branch office

 Used where a foreign company is performing a specific contract in Qatar.

 Authorised by the Ministry of Economy and Commerce where the project “facilitates the
performance of a public service or utility”.

 No need for a Qatari partner.

 Branch is only entitled to perform the specific contract for which it is registered.

 Branch will be fully taxable unless it is granted a special exemption.

 A special regime applies to branches of foreign engineering consultancy firms.

Commercial Agency

 The foreign company does not establish a presence in Qatar, instead an agent is appointed to
market goods and services within Qatar.

 Exclusive agencies must be registered and are governed by Qatari agency law.

 Under a registered agency, commission is payable on all sales of the products within the territory
even if the sales are not due to the activities of the agent.

 It is difficult to terminate a registered agency; in addition compensation is payable upon the


termination of the agency, including upon the expiry of a fixed term agency.

3
Representative Trade Office

 A method of establishing a “shop window” in Qatar.

 Can be used to promote a foreign company in Qatar and try to introduce it to Qatari companies
and projects.

 Cannot be used to contract to do business in Qatar. Business must be carried out by a foreign entity
(where the contract can be performed substantially outside Qatar) or by a company or branch
authorised to do business in Qatar.

4
Company structures
The two forms of vehicle most likely to be of interest to foreign investors are Limited Liability
Companies (LLCs) and so-called Article 68 Companies. (Other possible legal entities under Qatari law
are the Simple Partnership, the Joint Partnership and the Qatari Shareholding Company (QSC) but
foreign participation in these bodies is restricted).

If the foreign investor is permitted to own 100% of the company (by the Ministry of Economy and
Commerce as a result of investing in certain specified sectors) the single shareholder company can be
used as the vehicle for such investment.

Limited Liability Company

 Minimum capital of QR 200,000.


 Must have at least 51% Qatari ownership unless an exemption has been obtained.
 The parties’ profit shares do not necessarily have to reflect their shareholdings.
 10% of each year’s net profits must be kept within a company until the reserve stands at 50% of the
share capital.
 May not raise capital by public subscription and may not issue freely transferable shares or bonds.
 Shares may only be transferred after they have first been offered to the other shareholders by way
of pre-emption, unless the other shareholders have agreed to waive their right.
 May not carry out banking or insurance business or provide investment advice or investment
services to third parties.

Article 68 Company

 Formed by an investor, which may be foreign, with the Government or a 51+% Government owned
entity.
 The foreign investor’s share of the company is a matter for negotiation but can be greater than
51%.
 Corporate structure is a “Qatari Shareholding Company with Government Participation”
 Falls outside the Foreign Investment Law and, to a certain extent, the Commercial Companies Law.

Single shareholder company

 Minimum capital of QR200,000.


 May be foreign owned only if permitted by Ministry of Economy and Commerce.
 Subject to the laws relating to limited liability companies unless contradicted by a specific law
relating to single shareholder companies.

5
Commercial registration and other formalities
Using a “facilitator” or “government liaison officer”

Virtually all companies use a “facilitator” or “government liaison officer” to carry out all the necessary
registration formalities. Such a facilitator will also be invaluable for obtaining residence permits, driving
licences and telephone, power and water connections etc. A facilitator will know all the ins and outs of
the relevant procedures and requirements and will help minimise any frustrations which might
otherwise be experienced when setting up. Consequently, the steps set out below are only a brief high
level guide to what is required.

Company Formation

The following are required in order to incorporate a company and obtain a Commercial Registration:

 Memorandum & Articles of Association in Arabic which conform with the standard form prepared
by the Ministry of Economy and Commerce and have been approved by the Ministry.

 Notarised, authenticated and consularised copies of the foreign company’s Certificate of


Incorporation, Memorandum and Articles of Association.

 Letter from a bank indicating the deposit of the share capital at that bank.

 A lease contract for the office of the company.

 Chamber of Commerce Registration.

Once the company has been incorporated and the Commercial Registration issued the share capital
can be released to the company’s directors or the general manager for the purposes of running the
company. The following licences must then also be obtained:

 Municipal licence.

 Signage licence.

 Employer’s Immigration Department identity card.

Branch Office

The following are required in order to establish a branch office and obtain a Commercial Registration:

 Authorisation from the Ministry of Economy and Commerce to establish a branch.

 Notarised, authenticated and consularised copies of the foreign company’s Certificate of


Incorporation and Memorandum and Articles of Association.

6
 A notarised, authenticated and consularised power of attorney from the foreign company to the
manager of the branch.

 A copy of the contract in respect of which it is sought to establish the branch office.

 Chamber of Commerce Registration.

 A lease contract for the office of the company.

Once the branch has been approved and the Commercial Registration issued the following licences
must also be obtained:

 Municipal licence.

 Signage licence.

 Employer’s Immigration Department identity card.

If applicable, the company/branch will also need to be entered in the Importers’ Register and/or
Contractors’ Register.

7
Taxation
Companies

 Income tax is levied on businesses other than those wholly owned by GCC nationals.

 Income tax is charged on all profits arising in Qatar, including profits on the sale of the company’s
assets.

 The share of profits of the Qatari or GCC partner in a business is exempt from tax.

 An income tax exemption can be granted for a period of up to 10 years for major projects if they
meet certain criteria.

 Some countries have double tax treaties with Qatar, if not unilateral relief may be available, for
example UK unilateral relief is available against UK taxes where Qatari income tax has been paid.

Tax is payable at the following progressive rates:

Taxable income in Qatari Riyals Rate


0 – 100,000 Exempt
100,001 – 500,000 10%
500,001 – 1,000,000 15%
1,000,001 – 1,500,000 20%
1,500,001 – 2,500,000 25%
2,500,001 – 5,000,000 30%
5,000,001+ 35%

Individuals

There is no income tax on personal salaries.

Customs duty

The new GCC customs duty is 5% on most items. Exemptions from customs duty can be obtained for
the import of equipment relating to a particular project as can exemptions from customs duty for the
import of primary or semi-manufactured materials where they are not available locally. In addition to
customs duty, legalisation fees are payable on import documentation.

8
Staff
 A “Qatarisation” initiative is in place which aims to increase the number of Qatari nationals in the
public sector workforce. The Labour Law introduces Qatarisation initiatives for private sector
entities. The employment of Qatari nationals is one of the criteria taken into account when tax
exemptions are granted.

 All contracts of employment are governed by the Labour Law. They must be in Arabic and approved
by the Labour Department.

 In particular, employers should be aware of the requirement to pay end of service benefits to
employees.

 Companies will need to obtain residence and work permits for their expatriate staff. A Labour
Department Committee has been established to supervise applications for bringing in foreign
workers.

 All expatriate employees must be sponsored by their employer who is responsible for them while
they are in Qatar.

9
Property
 Ownership of land by foreigners is restricted.

 Land for projects can be given to foreign investors on long term leases for periods of up to 60 years
which may be renewed.

 Law no. (17) of 2004 permits foreigners to own freehold property in three new developments (West
Bay, The Pearl and Al Khor) and leasehold property in a further 18 developments.

10
Commercial contracts
Once a business entity has been established it will need to protect its interests when contracting with
other entities.

 The parties to an international contract are free to choose the law and jurisdiction which will govern
that contract. (If they do not choose an applicable law, the contract will be governed by the Qatari
Civil Code.)

 The parties may also agree in writing to refer disputes to arbitration.

11
Intellectual property
Traditionally, intellectual property rights were not as well protected in Qatar as foreign investors were
used to, however trademark and copyright laws were enacted in 2002 and a new patent law in 2006.

Trademarks

 Trademarks can be registered at the Trademark Office.

 Registrations are valid for 10 years from date of filing (renewable).

 Trademarks can be cancelled if not used for periods of 5 consecutive years in Qatar.

 The international classification of goods and services is used, a separate application must be made
for each class.

 Non-Qataris have the same rights as Qataris provided that their country treats Qatar reciprocally.

Copyright

 The Qatari copyright law protects original literary and artistic works including computer programmes
and databases which are creative in the selection and arrangement of their subject matter.

 Materials are registered at the Qatar Copyright Office in order to be protected.

 Protection extends, inter alia, to non-Qataris whose work is first published in Qatar or is published in
another country and then published in Qatar within 30 days of the first publication date, and to
works protected by international agreements.

Patents

 Qatari patent law of 2006 provides for registration of inventions and foreign patents at the Qatar
Patent Office.

 A GCC patent can be obtained by filing at the Patent Office in Riyadh, Saudi Arabia.

Design Rights

 Inventive designs or industrial models can be registered under the Trademark Law.

 Protection lasts for 5 years (renewable for 2 further 5 year periods).

12
Culture and customs
Finally, a ‘soft’ point but don’t forget to provide your staff (both those based in Qatar and those to
whom they will be reporting in the head office) with a briefing on local culture and customs.

We have already mentioned that a facilitator who knows the system can be extremely useful to guide
you through the required paperwork and practical steps and to advise you on cultural issues but it is
also vital to have a well-briefed individual from your organisation on the ground when setting up to
work alongside a facilitator and/or local partner.

13
Simmons & Simmons
If you would like any further information please contact

Andrew Wingfield
T +974 409 6720
E andrew.wingfield@simmons-simmons.com

Stuart Cavet
T +974 409 6740
E stuart.cavet@simmons-simmons.com

Samer Eido
T +974 409 6730
E samer.eido@simmons-simmons.com

This document is for general guidance only. It does not contain


definitive advice and specific advice should always be obtained.

14
Offices
Abu Dhabi London
Level 10 The ADNIC Building Khalifa Street CityPoint One Ropemaker Street
PO Box 5931 Abu Dhabi United Arab Emirates London EC2Y 9SS United Kingdom
T +971 (0)2 651 9200 F +971 (0)2 651 9201 T +44 (0)20 7628 2020 F +44 (0)20 7628 2070

Amsterdam Madrid
PO Box 79023 1070 NB WTC H Tower Simmons & Simmons Mochales & Palacios
Zuidplein 100 1077 XV Amsterdam The Netherlands Calle Miguel Angel 11 5th floor
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Brussels
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T +32 (0)2 542 09 60 F +32 (0)2 542 09 61 Corso Vittorio Emanuele II 1 20122 Milan Italy
T +39 02 72505.1 F +39 02 72505.505

Doha
Level 5 Al Mirqab Tower Al Corniche Street Moscow
PO Box 23540 Doha State of Qatar Simmons & Simmons CIS LLP
T +974 409 6700 F +974 409 6701 Gogolevsky Boulevard 11
119019 Moscow Russia
T +7 495 646 9300 F +7 495 646 9301
Dubai
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Dubai International Financial Centre Padua
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T +49 (0)2 11-4 70 53-0 F +49 (0)2 11-4 70 53-53

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