Qatar Financial Centre Enacts New Tax Regime

by Lorys Charalambous, Tax-News.com, Cyprus

13 October 2010

The Qatar Financial Centre Authority (QFCA) has announced the publication of regulations giving effect to the beneficial tax regime within the Qatar Financial Centre.

The tax regime in the Doha-located Qatar Financial Centre features the following benefits:

• 10% corporation tax on locally sourced profits;
• Self assessment regime and advance transaction ruling scheme;
• Tax incentives for reinsurance, captive insurance and asset management profits;
• Zero personal income tax;
• New regulations to ensure QFC inclusion in Qatar tax treaties negotiated with other countries

The tax regime was originally announced in 2006 and replaces the temporary tax holiday which ended on December 31, 2009.

Under the regime, with retroactive effect from January 1, 2010, all QFC-registered companies are subject to 10% corporation tax to be charged on locally sourced profits. The QFCA noted that this compares favorably with many other financial centers that often have higher rates of tax or have other charges/fees and taxes on turnover rather than profits.

Under the self-assessment scheme, tax returns and payment are due six months after the end of each accounting period.

In addition, to provide firms with tax treatment certainty, an advance transaction ruling scheme has been incorporated into the regime.

The QFCA commented of the new regime:

”The introduction of these tax regulations is integral to the QFC’s long-term strategy and this low rate has been introduced to encourage further investment in Qatar and in particular in the QFC.”

“The QFC is leading the expansion of Qatar’s financial services sector, providing a uniquely sustainable platform for regional growth in reinsurance, captives and asset management, and as such there are tax incentives in these three key strategic areas.”

”In addition, there are specific rules for Islamic Finance transactions to ensure equality of tax treatment with conventional finance transactions.”

Commenting, Shashank Srivastava, acting CEO of the QFCA said:

“It is important to have a viable tax regime that ensures a sustainable economy. We believe we have achieved the ideal balance for companies that operate here and the State of Qatar, which provides such world class services and access to one of the world’s most attractive investment pools.”

Ian Anderson, CFO and Director of Tax, added:

“The QFC was set up [in 2005] to be an onshore financial centre. By providing a very favorable tax environment we are hoping to attract businesses that will add value to Qatar. With this new regime in place we have also given constituent members of the QFC a high degree of long-term certainty over their local tax affairs.’

The QFCA has said that presentations are scheduled for November. These will detail the new regulations, and the practical aspects of completing returns and paying tax. A series of guidance notes covering the Tax Departments interpretation of specific areas of the regulations will be published on the Authority’s website to assist firms in making their tax returns, the Authority further disclosed.

Recommended