Qatar - Changes to income tax law include confirmation of 15% minimum tax
02 May 2023
A law published in Qatar’s official gazette on 2 February 2023 amends certain provisions in the 2018 Income Tax Law. Most significantly, the amendments re-affirm Qatar’s commitment to introducing a minimum tax under the OECD BEPS 2.0 project. Qatar will introduce a 15% minimum tax that will be “based on the excess profits” of affected Qatar-based companies in a manner consistent with international rules.
Other changes to the ITL include the following:
- The types of income that are subject to tax in Qatar are expanded. Although Qatar operates a territorial tax system, certain types of income derived from abroad are now subject to income tax, including income from foreign dividends, interest, royalties and technical service fees, and immovable property located abroad, where such income is not attributable to a foreign permanent establishment of a Qatari entity.
- As Qatar is now taxing foreign-source income, relief is granted for foreign tax paid on foreign income, but the relief is limited to the corporate income tax liability in Qatar and is subject to the fulfilment of certain conditions.
- A new criterion for Qatari nationality has been added under which every Qatari citizen is automatically considered a tax resident of Qatar. In addition, the tax residence criteria for individuals who have a “centre of vital interests” in Qatar has been removed. Changes were also made to the residence rules for companies.
- Private associations and institutions, private charitable organisations and institutions, and private foundations of public interest are now required to comply with all tax obligations, such as the preparation of audited financial statements and the filing of income tax returns. However, these entities will be considered tax-exempt entities.
- New reporting obligations are introduced for the economic substance regulations. Any “covered entity” that fulfils certain criteria is required to submit a report on the minimum indicators of its significant activities. Failure to comply will result in a penalty of 15% on net income and may have other consequences.
- Qatar-resident companies (and trusts established under Qatari law, administered in Qatar or trustees residing in Qatar) must report information on their (intermediary and ultimate) beneficial owners to the General Tax Authority.
The General Tax Authority will be issuing Executive Regulations that set out details and specifics of the changes.
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