February 14, 2023
Qatar enacts amendments to Income Tax Law
On 2 February 2023, Qatar published amendments to Law No. 24 of 2018 (the Income Tax Law) by way of Law No. 11 of 2022 in the Official Gazette. Law No. 11 of 2022 introduces important changes that will impact the taxation and compliance obligations of taxpayers. The amendments decreed under Law No. 11 of 2022 encompass the scope of taxable activities, exemptions, noncompliance penalties, and powers of the GTA.
On 13 December 2018, His Highness Tamim Bin Hamad Al Thani, the Emir of Qatar, issued Income Tax Law (Law No. 24 of 2018) replacing Law No. (21) of 2009 which was made effective on the same date. The Executive Regulations to the Law No. 24 of 2018 was issued on 12 December 2019.
The Income Tax Law is now amended by Law No. 11 of 2022 and the Executive Regulations regarding these changes are expected to be issued in the near future.
Key amendments to the Income Tax Law
Imposition of tax
Based on the amendments to the Income Tax Law, the following income earned abroad will now be taxed in Qatar.
Under the Preamble of Law No. 24 of 2018, certain persons (e.g., individuals, companies and any other body of persons) were considered out of scope and were not subject to the provisions of the Income Tax Law except for withholding tax and contract reporting provisions. Based on the amendments to the Income Tax Law, such persons would now be considered as within the scope of the Income Tax Law on a tax-exempt basis. Accordingly, the following persons and income earned abroad will be exempt from income tax in Qatar:
Reporting requirements and penalties
The amendments introduced new requirements in line with other existing laws in Qatar concerning economic substance regulations, ultimate beneficial ownership, and requirements arising from the digitization of the economy.
The amendments introduce a penalty of 15% of net income in instances where the "substance" tests are not met.
Minimum tax rate in compliance with BEPS 2.0
Qatar is a member of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The amendments to the Income Tax Law includes provisions reinforcing Qatar's commitment to the BEPS project, before the more detailed introduction of the Global Anti-Base Erosion Rules and/or a Qualifying Domestic Minimum Top-up Tax in the future. Measures are expected to be introduced to achieve a minimum tax rate of 15% on certain entities, which will be further clarified in the changes to the Executive Regulations.
Powers of the GTA
For purposes of tax inspection and exchange of information, the amendments to the Income Tax Law introduced the following as part of the powers of the GTA in obtaining relevant information for these purposes.
The amendments to the Income Tax Law also introduced other changes including:
Businesses should be mindful of these changes and consider how the regulations may impact their tax compliance obligations and potential tax liabilities in Qatar. The Executive Regulations with respect to these changes are expected to be issued at a later date.
For additional information with respect to this Alert, please contact:
EY Consulting LLC, Doha
Ernst & Young LLP (United States), Middle East Tax Desk, New York