Executive summary

On 27 March 2025, the State of Qatar published in the Official Gazette, Law No. 22 of 2024 (2024 Law Amendment), amending provisions of Income Tax Law No. (24) of 2018 (as amended by Law No. (11) of 2022) (ITL), by introducing a local Income Inclusion Rule (IIR) and a local Supplementary Minimum Tax Rule (Domestic Minimum Top-up Tax or DMTT) on multinational groups. The 2024 Law Amendment only, and not the full ITL, applies to all areas of Qatar, including to entities licensed by the Qatar Financial Centre (QFC), the Qatar Free Zones Authority (QFZA), Qatar Science & Technology Park (QSTP) and Qatar Media City (QMC).

The 2024 Law Amendment introduces a DMTT to ensure that in-scope multinational enterprise (MNE) groups operating in Qatar pay a minimum effective tax of 15% on their excess profits, as intended in the Global Anti-Base Erosion (GloBE) Model Rules (GLoBE Rules). The 2024 Law Amendment also introduces an IIR that allows for collection of taxes by the ultimate parent entity (UPE) or the intermediate parent entity (IPE) located in Qatar, for the low-taxed foreign constituent entities (CEs) of MNEs.

The 2024 Law Amendment is effective from 1 January 2025 and applies to fiscal years starting on or after 1 January 2025. It applies to MNEs operating in Qatar with a consolidated annual revenue amounting to or exceeding €750m in two of the last four fiscal years. The 2024 Law Amendment refers to the GloBE Rules and incorporates the Commentary to the GloBE Rules (Commentary), and any Administrative Guidance issued by the OECD, unless there is a decision by the Council of Ministers to exclude any amendments to the Commentary or additional Administrative Guidance. This includes the ordering rules as well as application of any safe harbors provided in the Commentary and Administrative Guidance.

The 2024 Law Amendment incorporates financial penalties related to noncompliance that are in line with previously stated financial penalties in the ITL, including providing for a "transitional penalty relief regime." In addition, other penalties are outlined that are not covered by the transitional penalty relief regime.

Background

The 2024 Law Amendment represents Qatar's commitment to the OECD/G20 Inclusive Framework on the BEPS 2.0 project and marks a significant milestone, as Qatar joins other Gulf Cooperation Council (GCC) countries to legislate provisions from the GloBE Rules. The DMTT rules allow Qatar to retain the right to tax Qatar-sourced income and to prevent foreign governments' collection of tax on such Qatari-sourced income. Further, the IIR allows Qatari-headquartered MNE groups and relevant Qatari IPEs the right to tax the low-taxed excess profits of their foreign CEs. The IIR also protects in-scope Qatari-headquartered companies from being subject to the Undertaxed Profits Rule (UTPR) on their non-Qatar, low-taxed CEs.

Key provisions of the 2024 Law Amendment

Scope and applicability

An MNE group is defined, as per Article 1.2 of the GloBE Rules, as a group that includes at least one CE that is not located in the jurisdiction of the UPE. A CE is defined as per Article 1.3 of the GloBE Rules.

The 2024 Law Amendment applies to MNE groups operating in Qatar, with revenues amounting to or exceeding €750m as per the consolidated financial statements of the UPE for at least two out of the four fiscal years immediately preceding the tested year.

The 2024 Law Amendment also introduces a DMTT, which is defined as a tax calculated on the basis of excess profits of local CEs in a manner consistent with the GloBE Rules which raises the local tax liability to 15% on the domestic excess profits. Further, the 2024 Law Amendment includes an IIR, as defined in Article 2.1 of the GloBE Rules, which allows Qatari-headquartered MNE groups and relevant Qatari IPEs the right to tax the low-taxed excess profits of their foreign CEs. The 2024 Law Amendment outlines that the DMTT and the IIR will be interpreted and applied in conformity with the GloBE Rules.

Filing obligations

Qatari CEs should register for the purposes of applying the IIR and QDMTT and should file a GloBE Information Return (GIR) in accordance with Article 8.1.1 of the GloBE Rules. In addition, there should be a requirement for Qatari CEs to notify on the filing location of the GIR, in accordance with Article 8.1.3 of the GloBE Rules. Finally, Qatari CEs should also file a separate IIR return and a DMTT return.

Executive Regulations or Circulars providing additional guidelines regarding deadlines and administrative processes are expected to be issued.

Penalties applicable under the 2024 Law Amendment

There are several penalty provisions included in the 2024 Law Amendment that are broadly aligned with previous financial penalties in the ITL. These are summarized below:

• Failure to submit any declaration on time as part of the 2024 Law Amendment can attract a penalty of 500 Qatari riyal (QAR500) for each day of delay, with a maximum penalty of QAR180,000.
• Failure to pay the tax under the DMTT or the IIR within the prescribed time (yet to be determined) can result in a penalty of 2% of the amount of tax due for each month of delay or part thereof, limited to the amount of tax due.
• Any taxpayer who does not comply with the registration and notification requirements of this 2024 Law Amendment shall be subject to a penalty of QAR20,000.

The 2024 Law Amendment provides a transitional penalty relief regime against the penalties outlined above during the "transition period" if the MNE group can demonstrate it has taken "reasonable measures" to comply with the provisions of the 2024 Law Amendment. This will be at the discretion of the General Tax Authority and will consider if the MNE group has established in good faith, appropriate processes for understanding and complying with the 2024 Law Amendment.

The "transition period" is defined as any fiscal year commencing on or before 31 December 2026, but does not include fiscal years ending after 30 June 2028.

An MNE group that is involved in any act of tax evasion or avoidance shall not be entitled to benefit from the transitional penalty relief regime.

The following penalties are stated separately in the 2024 Law Amendment, and are not covered by the "transitional penalty relief regime:"

• Failure to keep records and documents required in accordance with its provisions shall result in a penalty of QAR30,000 and the penalty shall be imposed even in the event of a dissolution of a company for a period of five years after dissolution, on the last manager or those in charge of the CE.
• Failure to respond to the tax authority with requested information upon inquiry within the stipulated timeframe shall be subject to a QAR200 penalty per day up to maximum penalty of QAR72,000 and shall be applied whether the violator is the same or another person.
• Any taxpayer submitting an incomplete or erroneous return shall be subject to a penalty of QAR100 for each missing or erroneous piece of information up to QAR10,000 for each registration, declaration, notification or request for information. If the missing or erroneous information leads to an underpayment of tax under the 2024 Law Amendment, the taxpayer shall be subject to a penalty of 50% of the underpaid tax related to the missing or erroneous information.

Further, the 2024 Law Amendment indicates that licensing authorities that have their own tax legislation may issue regulations in coordination with the General Tax Authority, and in accordance with the GloBE Rules, the Commentary, and any Administrative Guidance issued by the OECD.

Implications

MNEs operating in Qatar must evaluate the impact of the 2024 Law Amendment on their operations and facilitate compliance with the new requirements. Future regulatory updates are expected to offer more clarity on the compliance requirements.