Doing Business in Qatar An Overview

An extremely strong team that always operates to a very high standard. Clydes really goes the extra mile.
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Doing business in Qatar

In keeping with the goals enunciated in its National Vision 2030, Qatar has worked to shift its economic and developmental focus away from a reliance on oil and gas by promoting a policy of economic diversification as evidenced by the now internationally recognised brands of Qatar Airways and Al Jazeera, and its successful bid to host the 2022 FIFA World Cup. Recognising that the participation of non-Qatari investors is an integral part of the successful realisation of this policy, Qatar continues to implement new legislation aimed at liberalising the business environment for such investors, and introducing incentives and exemptions that supplement the country's already considerable investment appeal. As Qatar's economy has evolved in line with these goals, non-Qatari investors have increasingly acknowledged the need for experienced local advisers who are able to stay abreast of legislative developments and advise on the potential impact such developments may have on their businesses. We set out below an overview of the matters with which a non-Qatari investor will need to be familiar when doing business in Qatar. 1 Investment restrictions
(a) Non-Qatari investors may only invest in Qatar in accordance with the provisions of the Foreign Investment Law (Law No.(13) of 2000 as amended). (b) Non-Qatari investors may invest in all parts of the national economy (other than those set out in (c) below) with a Qatari partner who must own at least 51% of any enterprise. (c) Non-Qatari investors may not invest in commercial agencies or, broadly speaking, real estate. Approval from the Council of Ministers is (e) Foreign capital is guaranteed against expropriation (although the State may acquire (d) The Minister of Business & Trade (Minister) may permit non-Qatari investors to own up to 100% of an enterprise in specific business sectors, being, agriculture, industry, health, education, tourism, the development of natural resources, energy or mining, consultancy and technical services, information technology, culture, sport and recreation/entertainment services and distribution services, although such permission is not granted frequently. required for foreign investment in banking or insurance.

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assets for public benefit on a non-discriminatory basis, provided the full economic value is paid for the asset). (f) A non-Qatari company which is performing a specific contract in Qatar may register a contracting entity or branch office (Branch) if the project facilitates the performance of a public service or utility. (g) A non-Qatari company operating in Qatar under a Qatari government concession to extract, exploit or manage the State's natural resources is exempt from the Foreign Investment Law. In practice this covers all the major oil companies. (h) A company formed between a non-Qatari entity and the Government or a Governmental entity (an Article 68 Company) will be subject to special rules.

for which it is registered and registration will only be given for the duration of the contract. The Branch will be subject to Qatar corporate income tax unless it is granted a special exemption. A special regime applies to Branches of non-Qatari engineering consultancy firms.

2.3

Commercial Agency
In the case of a commercial agency, the non-Qatari company does not establish a presence in Qatar (nor should it have any physical presence in Qatar, for example, any employees operating in Qatar). Instead a 100% Qatari entity or individual agent is appointed to market and sell goods within Qatar; any provision of services by that Qatari entity or individual agent should be ancillary to such marketing and selling. Exclusive agencies must be registered and are governed by Qatari agency law (comprised of the Qatar Code of Commerce and Law No.(8) of 2005). Under a registered agency, commission (up to 5%) is payable on all sales of the products within the territory even if the sales are not a result of the activities of the agent. It is difficult to terminate a registered agency. Compensation is payable upon the termination of the agency, including upon the expiry of a fixed term agency.

Choosing the most appropriate business medium

Company
A non-Qatari investor seeking to undertake business in Qatar in the long-term will usually apply to register a company with the Ministry of Business & Trade (MBT); various exemptions, including tax exemptions, are available to attract non-Qatari investment. In almost all cases a Qatari partner will be required for the establishment of a company. The company will be subject to Qatar corporate income tax unless it is granted a special exemption.

2.1

2.4

Representative Office
A Qatari representative office is in fact a marketing platform or "shop window" which can ONLY be used to promote a non-Qatar company in Qatar and try to introduce it to Qatari companies and projects. Any business must be carried out by a non-Qatari entity where the contract can be performed substantially outside Qatar, or by a company or Branch registered with the MBT and authorised to do business in Qatar.

2.2

Branch
Branches may be registered where a non-Qatari company is performing a specific contract in Qatar. There is no requirement to have a Qatari partner. The subject matter of the contract must facilitate the performance of a public service or utility which the MBT currently defines as having a contract with the Government or a quasi-Governmental entity. Branch authorisation is at the discretion of the Minister. The Branch is only entitled to perform the specific contract

Company structures
The two forms of vehicle most likely to be of interest to non-Qatari investors are Limited Liability Companies (LLCs) and so-called Article 68 Companies. Other possible legal entities under Qatari law are Limited

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Parnerships, Particular Partnerships, Holding Companies, Single Owner Companies and Qatari Shareholding Companies (QSC), but non-Qatari participation is restricted. If the non-Qatari investor is permitted to own 100% of the company (by MBT as a result of investing in certain specified sectors) the single shareholder company can be used as the vehicle for such investment. (c) (b)

which the Government holds shares in the share capital of a company; the non-Qatari investor's share of the company is a matter for negotiation, but can be greater than 51% subject to Council of Ministers' approval; corporate structure is of a "Qatari Shareholding Company with Government Participation"; and

3.1

LLC
(d) Characteristics include: (a) (b) minimum capital of QAR 200,000; falls outside the Foreign Investment Law and, to a certain extent, the Commercial Companies Law.

3.3
must have at least 51% Qatari ownership unless an MBT exemption has been obtained; (c) the parties' profit shares do not necessarily have to reflect their shareholdings, for example, MBT will currently approve articles of association where the non-Qatari partner receives up to 97% of distributable profits (and is consequently liable for 97% of any losses); (d) 10% of each financial year's net profits must be kept within an LLC until the cumulative reserve stands at 50% of the share capital; (e) may not raise capital by public subscription and may not issue freely transferable shares or bonds; (f) shares may only be transferred after they have first been offered to the other shareholders by way of pre-emption unless such rights are waived; and (g) may not carry out banking or insurance business or provide investment services to third parties.

Single Shareholder or Owner Company

Characteristics include: (a) (b) minimum capital of QR 200,000; and subject to the laws relating to LLCs, unless any provisions are contradicted by the new single shareholder company legal and regulatory provisions. Note: the MBT has indicated that it will prioritise applications for 100% LLCs or Single Shareholder Companies where the single shareholder is non-Qatari if the share capital of the company is in excess of the minimum and where the company's activities will add value in terms of employment, training, technology, etc. to the Qatar market.

Commercial registration and other formalities

Government Liaison Officer
Qatari companies should appoint a government liaison officer or a facilitator to carry out all the necessary registration formalities associated with establishment. The steps set out below are only a brief overview of what is required. Such a facilitator will also be invaluable for obtaining residence permits, driving licences and telephone, power and water connections etc.

4.1

3.2

Article 68 Company
Characteristics include: (a) formed between an investor, which may be nonQatari, and the Government or a company in

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4.2

Company formation
The following are required in order to incorporate a company and obtain a Commercial Registration (CR):

(c)

notarised, legalised and authenticated power of attorney from the non-Qatari company to the manager of the Branch;

(d) (a) Articles of Association in Arabic which must be approved by MBT; (b) notarised, legalised and authenticated copies of the non-Qatari company's constitutional documents; (c) notarised, legalised and authenticated directors minute and power of attorney from the nonQatari company to its incorporation representative in Qatar; (d) letter from a bank indicating the deposit of share capital (in full) at that bank; and (e) Qatar Chamber of Commerce Registration. (b) (e)

a copy of the contract on which the Branch registration will be based; and Qatar Chamber of Commerce Registration.

Once the Branch has been approved and the Commercial Registration issued the following licences must also be obtained: (a) Trade Licence and Signage Licence issued by the appropriate Qatar Municipality (a lease contract for the office of the company will be required amongst other things); and employer's Immigration Department Identity Card issued by the Immigration Department.

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5.1

Import and export

Customs duties and procedures
If applicable, the company/Branch will also need to be entered in the Importers' Register and/or Contractors' Register. The import of goods into Qatar is regulated by the Customs Law (No.(40) of 2002) which implements the regulations of the GCC Customs Union. In general a person wishing to import goods into Qatar for sale must be registered in the Importers' Register and be approved by the Qatar Chamber of Commerce. Goods (see exempt goods referred to below) can be

Once the company has been incorporated and the CR issued the share capital can be released to the company's general manager (or directors) for the purposes of running the company. The following licences must then also be obtained: (a) Trade Licence and Signage Licence issued by the appropriate Qatar Municipality (a lease contract for the office of the company will be required amongst other things); and (b) employer's Immigration Department Identity Card issued by the Immigration Department.

4.3

Branch
The following are required in order to register a Branch and obtain a CR: (a) authorisation from the Minister to register a Branch; (b) notarised, legalised and authenticated copies of the non-Qatari company's constitutional documents;

imported through a registered importer with the payment of a standard rate of customs duty of 5% of invoice (Cost, Insurance and Freight) value. In addition to customs duty, legalisation fees are payable on import documentation.

5.2

Documentation requirements
To release imports the following documents are required:

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(a) (b) (c) (d)

certificate of origin; invoice and shipping document; full description of goods; and health and quality certificate, if applicable.

Non-Qatari investors are urged to obtain Qatar tax advice before entering the Qatar market; the "Big 4" accounting firms have offices in Qatar. Note: we do not include GCC individuals and entities in our reference to non-Qatari.

6.2 5.3 Duty exemptions

Tax treaties
Some countries, such as the United Kingdom, have

The GCC States have approved a list of some 417 exempted goods, and have also approved new regulations providing for customs duty exemptions for imports for industrial projects.

double tax treaties with Qatar. In the absence of such treaties, unilateral relief may available where Qatari income tax has been paid.

6.3
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.

Tax exemptions
The Tax Law establishes the concept of tax exemption for specific projects where certain conditions apply. Application for tax exemption of projects is evaluated by a Committee reporting to the Ministry of Economy and Finance.

5.4

Personal effects and restrictions

The exemption periods are 3 years on the sole Once a non-Qatari employee is resident in Qatar there is normally no difficulty in importing personal effects free of customs duty. However, the import and sale of alcohol and pork products are prohibited and such goods may be seized. There are currently no personal taxes, social approval of the Minister of Economy and Finance and 6 years on the approval of the Council of Ministers.

6.4

Individuals

5.5

Exports
There are currently no duties levied on exports.

insurance, or other statutory deductions from salaries and wages paid in Qatar.

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6.1

Staff
'Qatarisation'
A Qatarisation initiative is in place which aims to

Taxation
7.1 Registered Entities
The Tax Law (Law No.(21) of 2009) introduced a new tax regime with effect from 01 January 2010. Profits attributable to non-Qatari recipients are now taxed at a flat rate of 10%. The new tax law also introduced withholding tax for the first time. Qatari individuals and registered entities must now withhold either 5% or 7% of any payment made to a non-Qatari service provider (depending on the services provided) where that provider cannot demonstrate that he, she or it has a permanent place of establishment in Qatar. The majority of Qatari contracts of employment will be increase the number of Qatari nationals in the public sector workforce. The Labour Law (Law No.(14) of 2004) 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.

7.2

Contract of employment

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governed by the Labour Law which must be in Arabic and approved by the Labour Department. Employment contracts for employees of Government entities and agencies as well as some energy companies will be governed by the Human resources Law (Law No.(8) of 2009).

There are currently no free trade zones in Qatar.

9.2

Qatar Science & Technology Park (QSTP)

The QSTP has a special free zone status and is a centre of research and commercial excellence for scientific development and regionally produced intellectual property for both Qatari and international partners.

7.3

End of service
Employers should be aware of the requirement to pay end of service benefits to employees.

The QSTP promotes the research and commercialisation of technology projects and training.

7.4

Residence and work permits

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Companies will need to obtain residence and work permits for their non-Qatari and non-GCC employees. A Labour Department Committee has been established to supervise and approve or reject applications for employees.

Qatar Financial Centre (QFC)

The QFC Law (Law No.(7) of 2005) established the QFC as an international business centre for financial services. The QFC attracts international financial institutions and

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

multinational corporations to establish businesses in international banking, financial services, insurance, corporate head office functions and related services. The QFC is organized into 2 authorities, a commercial authority and a regulator, the QFC Authority (QFCA) and the QFC Regulatory Authority (QFCRA), respectively. Both the bodies are independent of each other and from the Government of Qatar. The QFCRA permits regulated activities primarily related to financial, insurance, brokerage and fund management services. In addition, the QFCA licenses unregulated activities such as ship broking, professional services, for example, legal and accounting firms, and classification services. The entities registered within the QFC may operate and trade without a local sponsor or service agent, ie. 100% non-Qatari ownership, and are governed by the QFC rules and regulations, including tax and employment regulations.

Real estate
Ownership of land by non-Qataris, both individuals and companies is restricted. Land for projects can be given to non-Qatari investors on long term leases for periods of up to 50 years which may be renewed. Law No.(17) of 2004 permits non-Qataris to own freehold property in three new developments (West Bay, The Pearl and Al Khor) and leasehold property (usufruct rights) in a further 18 regions.

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9.1

Free zones
General Free Trade Zones
In September 2005, Qatar enacted a new law for the establishment of Free Zones in the State aimed at sustaining and diversifying the economy. Companies setting up in the free zones will operate and trade without a local sponsor or service agent, and may enjoy 100% non-Qatari ownership and many other benefits.

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Intellectual Property
Traditionally, intellectual property rights were not as well protected in Qatar as in more developed

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jurisdictions. However Trademark and Copyright laws were enacted in 2002, as well as the Design Law in 2005 and a Patent Law in 2006.

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Qatar Exchange (QE)

The QE (formerly the Doha Securities Market) commenced operations in May 1997, listing the shares of Qatari QSCs. Non-Qatari investors are allowed to invest directly in shares subject to a ceiling of 25% (more than 25% needs the Council of Ministers' approval) of the issued share capital of companies quoted on the QE. The QE also trades bonds and treasury instruments. The QE initially witnessed a decade of spectacular growth, but was, like all international exchanges, affected by the "credit crutch". Current reports highlight strong leadership, recovery, and more importantly, future growth.

11.1 Trademark Law (No.(9) of 2002)

Trademarks can be registered at the Trademark Office and are valid for 10 years from the date of filing. Registration may be renewed and may also be cancelled where a trade mark has not been used for 5 consecutive years. Where 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.

13

Legal environment
Qatar is a civil code jurisdiction (unlike, eg. England which is a common law jurisdiction) although common law principles have some influence given Qatar was a British Protectorate. The legal system and its key laws are modelled on those of Egypt which, in turn, are modelled on the Napoleonic Codes of France. As is the case in most civil jurisdictions, courts in Qatar do not rely on a formal system of precedent and there is no formal reporting of court decisions apart from those decisions of the Court of Cassation which can lead to unpredictability in litigious matters. With the exception of the QFC, all laws issued in Qatar are issued in Arabic and formal translations are generally not made available by the Qatari authorities. Also, with the exception of the QFC Court, proceedings before the Qatari courts take place in Arabic. The judiciary is independent from the Government and is practically divided into 2 court systems. The first, the civil, commercial and criminal system, and the second, the Sharia'a system, which administers Islamic law, including matters pertaining to marriage, divorce, child support, succession and some criminal offences.

11.2 Copyright Law (No.(7) of 2002)

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 lasts during the life of the author and for 50 years after his or her death. 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.

11.3 Design Rights Law (No.(6) of 2005)

Inventive designs or industrial models can be registered under the Trademark Law. Protection lasts for 10 years.

11.4 Patent Decree (Law No.(30) of 2006)

Inventions and foreign patents may be registered at the Qatar Patent Office. Protection lasts for 20 years. A GCC patent can be obtained by filing at the Patent Office in Riyadh, Saudi Arabia.

Generally, 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

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applicable law, the contract will be governed by the Qatari Civil Code. The parties may also agree in writing to refer disputes to arbitration.

trafficking in alcohol. Drunken behaviour in public or driving under the influence of alcohol is an offence punishable by imprisonment, a fine or both, and the revocation of the offender's driving licence in relation to the latter. Qatar bans all pork products. Qatar prohibits individuals from photographing airports, Government Ministry buildings or defence installations and care should be taken to avoid taking photographs that might constitute an invasion of an individual's privacy. As with all Arab peoples, the tradition of hospitality and generosity is strong. It is important to display courtesy and patience in negotiations.

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Social and business customs

Qatar is a Muslim state, and the heritage of Islam is deeply rooted in the Qatari character. Islamic customs govern the general way of life; care must be taken to respect this, particularly in such matters as the dress code, the observance of the times of prayer and the fasting month of Ramadan, when food and drink may only be consumed between sunset and sunrise. The importation and consumption of alcohol is strictly regulated, however, liquor permits may be obtained by non-Qatari employees in certain circumstances and the major hotels are allowed to serve alcohol in restaurants and selected bars. Qatar prohibits the brewing and

Clyde & Co key contact

David Salt, Partner Doha, Qatar david.salt@clydeco.com.qa

Further advice should be taken before relying on the contents of this summary. Clyde & Co LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde & Co LLP. Clyde & Co LLP is a limited liability partnership registered in England and Wales under number OC326539. A list of members is available for inspection at its registered office 51 Eastcheap, London EC3M 1JP. Clyde & Co LLP uses the word "partner" to refer to a member of the LLP, or an employee or consultant with equivalent standing and qualifications. Regulated by the Solicitors Regulation Authority. Qatar Financial Centre Branch licensed by the Qatar Financial Centre Authority. Clyde & Co LLP 2011

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