Qatar’s Emir, Sheikh Hamad bin Khalifa al-Thani, on February 1, passed Law No. 1 of 2010, amending provisions in Law No. 13 of 2000, which determines limits to foreign investors’ shareholdings in certain business activities.
Under the new provisions, which will enter into force after cabinet approval and publish in the official gazette, foreign investors will be able to be majority shareholders in many business activities that were previously exclusive to Qatari enterprises. Currently foreign investment is limited to 49% of capital for most activities in the state; however, upon special government approval, up to 100% ownership by non-Qatari investors may be allowed in certain sectors.
Previously foreign enterprises could hold a shareholding exceeding 49% if they operated in the following sectors: certain industrial activities; healthcare; education; tourism; mining and mineral extraction. The new provisions will allow foreign entities to hold 100% ownership in businesses involved in providing consultancy services, distribution services, information technology, and services related to sports, culture and entertainment. Banking, insurance, commercial agencies, and real estate (except in designated areas), remain off limits to prospective foreign investors.
The move is another step in Qatar’s efforts to encourage foreign investment to generate extra revenues to offset the fall in oil revenues. In late 2009 the country introduced a flat 10% corporate income tax rate, replacing the original system which comprised of seven thresholds with businesses paying as much as 35%.
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