Company Formation in Qatar – Opportunities & Restrictions
Posted on March 26th, 2014With an annual GDP of $183 billion, Forbes magazine named Qatar the richest country in the world per capita in 2013. Holding some of the world’s largest natural gas and oil reserves, Qatar has shown itself to be an influential economic power in the Arab region and across the globe. A Qatar company formation could therefore be an extremely exciting and profitable venture. The Foreign Investment Law (Law No.(13) of 2000 as amended) helps us better understand how foreign investment is regulated, this blog will summarise some of the significant opportunities and restrictions for non-Qatari investors.
Understanding the Qatar Freezone
The Qatar government welcomes foreign entities and promote their direct investment to help the economy grow. In order to attract such foreign investments, the Ministry of Economy and Commerce offer various incentives including tax breaks and an exclusion from customs duty.
In September 2005, the Qatari government passed a law making the Qatar Science and Technology Park (QTSP) a "free zone", allowing foreign companies to set up a 100 percent owned entity free from tax and duties. This means that companies planning to set up their business inside the Qatar free zone can be completely possessed by non-Qatari person(s). The condition being that the main activities of the entity contribute to the advancement science, technology, research and development.
Non-Qataris can also plan their company formation in Qatar within outside free zone with the help of a local sponsor
A company set up outside a free zone can only be 49 percent owned by a non-Qatari. If you have future plans for company formation in Qatar, be sure to check the rules that a non-Qatari investor will need to be familiar with when doing business in Qatar.
Investment Restrictions for a Non-Qatari
(a) Non-Qatari investors may only invest in Qatar as provided for by 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 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 .