_downloads_doing business in qatar (lr)

7/28/2019 _downloads_Doing Business in Qatar (LR)

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An extremely strong team that always

operates to a very high standard. Clydes

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Chambers, 2011


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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

required for foreign investment in banking or

insurance.

(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.

(e) Foreign capital is guaranteed against

expropriation (although the State may acquire

www.clydeco.com 1

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 ofeconomic 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.


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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.

2 Choosing the most appropriate

business medium

2.1 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.

2.2 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

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.

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.

3 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.

3.1 LLC

Characteristics include:

(a) minimum capital of QAR 200,000;

(b) 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.

3.2 Article 68 Company


(a) formed between an investor, which may be non-

Qatari, and the Government or a company in

which the Government holds shares in the share

capital of a company;

(b) 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;

(c) corporate structure is of a "Qatari Shareholding

Company with Government Participation"; and

(d) falls outside the Foreign Investment Law and, to

a certain extent, the Commercial Companies

Law.

3.3 Single Shareholder or Owner Company


(a) minimum capital of QR 200,000; and

(b) 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.

4 Commercial registration and otherformalities

4.1 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.

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4.2 Company formation

The following are required in order to incorporate a

company and obtain a Commercial Registration (CR):

(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 non-

Qatari 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.

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 IdentityCard 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;

(c) notarised, legalised and authenticated power of

attorney from the non-Qatari company to the

manager of the Branch;

(d) a copy of the contract on which the Branch

registration will be based; and

(e) 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

(b) employer's Immigration Department Identity

Card issued by the Immigration Department.

5 Import and export

5.1 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

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) certificate of origin;

(b) invoice and shipping document;

(c) full description of goods; and

(d) health and quality certificate, if applicable.

5.3 Duty exemptions

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.

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.

5.4 Personal effects and restrictions

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.

5.5 Exports

There are currently no duties levied on exports.

6 Taxation

6.1 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.

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 Tax treaties

Some countries, such as the United Kingdom, have

double tax treaties with Qatar. In the absence of such

treaties, unilateral relief may available where Qatari

income tax has been paid.

6.3 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.

The exemption periods are 3 years on the sole

approval of the Minister of Economy and Finance and 6

years on the approval of the Council of Ministers.

6.4 Individuals

There are currently no personal taxes, social

insurance, or other statutory deductions from salaries

and wages paid in Qatar.

7 Staff

7.1 'Qatarisation'

A Qatarisation initiative is in place which aims to

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

The majority of Qatari contracts of employment will be

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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).

7.3 End of service

Employers should be aware of the requirement to pay

end of service benefits to employees.

7.4 Residence and work permits

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.

All expatriate employees must be sponsored by the

employer who will be responsible for them while they

are in Qatar.

8 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.

9 Free zones

9.1 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.

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.

The QSTP promotes the research and

commercialisation of technology projects and training.

10 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

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.

11 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.

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.

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.

12 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.

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 li tigious 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.

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.

14 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

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.

8 www.clydeco.com

David Salt, Partner

Doha, Qatar

[email protected]

Clyde & Co key contact

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


11/12www.clydeco.com

Abu Dhabi

PO Box 54204

7th Floor West Tower

Abu Dhabi Mall

Abu Dhabi

United Arab Emirates

Tel: +971 2 644 6633

Fax: +971 2 644 2422

Email: [email protected]

Bangalore*

ALMT Legal

2 Lavelle Road

Bangalore 560 001

India

Tel : +91 (0) 80 4016 0000

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Gospodar Jevremova 47/12

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Caracas

Tercera Avenida

Entre Sexta y Sptima

Transversal

Quinta RR

Urbanizacin Los Palos

Grandes

Chacao Caracas

Venezuela

Tel: +58 212 2855411/2857118

Fax: +58 212 2856670/2855098Email: [email protected]

Dar es Salaam*

11th Floor, Exim Tower

Ghana Avenue

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Dar es Salaam, Tanzania

Tel: +255 (0) 767 302 200

Fax +255 (0) 774 303 060


Doha

Qatar Financial Centre Tower 1

9th Floor, Office 902

West Bay

PO Box 31453Doha, Qatar

Tel: +974 4496 7434

Fax +974 4496 7412


Dubai

City Tower 2

Suite 102

Sheikh Zayed Road

PO Box 7001

Dubai

United Arab Emirates

Tel: +971 4 331 1102

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Guildford

1 Stoke Road

Guildford GU1 4HW

United Kingdom

Tel: +44 (0) 1483 55 55 55

Fax: +44 (0) 1483 56 73 30


Hong Kong

18th Floor CITIC Tower

1 Tim Mei Avenue Central

Hong Kong

Tel: +852 2878 8600

Fax: +852 2522 5907


London

51 Eastcheap

London EC3M 1JP

United Kingdom

Tel: +44 (0) 20 7623 1244

Fax: +44 (0) 20 7623 5427


Moscow

Clyde & Co (CIS) LLP

Khlebniy pereulok, Building 26

121 069 Moscow

Russian Federation

Tel: +7 495 601 9006

Fax: +7 495 601 9005


Mumbai*

ALMT Legal

4th Floor, Express Towers

Nariman Point

Mumbai 400 021

IndiaTel: +91 (0) 22 4001 0000

Fax: +91 (0) 22 4001 0001


Nantes

11 Place Royale

44000 Nantes

France

Tel: +33 (0) 2 40 47 00 71

Fax: +33 (0) 2 40 35 84 82


New Delhi*

Incube

18 Nehru Place

New Delhi 110 019India

Tel: +91 11 3061 4401

Fax: +91 11 3061 4411

New Jersey

200 Campus Drive

Suite 300

Florham Park

New Jersey 07932

Tel: +1 973 210 6700

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New York

The Chrysler Building

405 Lexington AvenueNew York 10174

United States

Tel: +1 212 710 3900

Fax: +1 212 710 3950


Paris

134 Boulevard Haussmann

75008, Paris

France

Tel: +33 (0) 1 44 43 88 88

Fax: +33 (0) 1 44 43 88 77


Piraeus

10 Akti Poseidonos

185 31 Piraeus

Greece

Tel: +30 210 417 0001

Fax: +30 210 417 0002


Rio de Janeiro

Av. Rio Branco No 257-808

Centro, Rio de Janeiro

CEP 20040-009

Brazil

Tel: +55 21 2217 7700

Fax: +55 21 2217 7720Email: [email protected]

Riyadh*

Tatweer Tower 3, 9th Floor

King Fahad Road

Riyadh, 11474

Kingdom of Saudi Arabia

PO Box 16560

Tel: +966 1 200 8868

Fax: +966 1 200 8558


www.albosailylawoffice.com

San Francisco

101 Second Street

24th FloorSan Francisco, CA 94105

United States

Tel: +1 415 365 9800

Fax: +1 415 365 9801


Shanghai

Unit 1107 AZIA Center

1233 Lujiazui Ring Road

Lujiazui

Shanghai 200120

China

Tel: +86 21 5877 5128

Fax: +86 21 5877 9128


Singapore

3 Anson Road

#21-01 Springleaf Tower

Singapore 079909

Tel: +65 6544 6500

Fax: +65 6544 6501


St. Petersburg*

Musin & Partners

Apt. 2, 23 Roentgena Street

St. Petersburg 197101

Russia

Tel: +7 812 232 2297

Fax: +7 812 233 8109


Clyde & Co LLP offices and associated* offices


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