Qatar’s business sector gears up to deal with evolving global and domestic tax laws: EY

Doha, Qatar–20 February 2019

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  • New tax laws introduced to encourage transparency foreign inward investment into Qatar
  • Unification of domestic withholding tax rate at a standard 5% will ease the reporting burden on taxpayers and reduce disputes with tax assessors

In line with Qatar’s vision to diversify its sources of revenue, and to adopt global taxation standards, the Government of Qatar recently introduced a new taxation law that reinforces the Government’s tax policy objective of offering a modern and transparent set of tax rules to encourage foreign inward investment into the country.

To discuss the evolving tax and regulatory framework in Qatar and its impact on multinationals and local organizations, EY tax experts shared key insights on the latest developments at a recent EY tax conference in Doha attended by more than 100 representatives from multinational and local companies.

New Tax Regulations

Discussing the new tax regulations, Ahmed Eldessouky, Partner, Tax, EY, said: “The new tax laws as drafted, provide many opportunities for companies to effectively plan their operations in Qatar to minimize any tax leakages and meet the enhanced domestic and global tax reporting obligations. The full executive regulations are expected to be released in the near future.”

EY tax experts commended the unification of the domestic withholding tax rate at a standard 5%, stating that it should ease the reporting burden on taxpayers and reduce disputes with tax assessors on the earlier applicability of a 5% or 7% rate to charges by non-resident service providers, with short term activities in Qatar, that are billed to Qatari companies.

Simultaneously, the law introduced penalties to encourage and enforce full compliance with the local reporting obligations.

International Tax Developments

Focusing on international tax developments, the experts emphasized the impact of the new economic substance and transparency rules on Qatari companies, in addition to the latest transfer pricing developments and the country by country reporting adopted by Qatar in 2018.

Marcel Kerkvliet, EY MENA International Tax Leader, said:
“The increased level of interest by the tax authorities in transfer pricing adjustments mandates companies to revisit their intercompany transactions and transfer pricing documentation. In the global market, many nations require businesses to have a substantial purpose and economic activity which has led to businesses and companies operating in Qatar to readdress their existing legal entity structures.”

Impact of International Financial Reporting Standards (IFRS)

The impact of the new IFRS standards on the tax accounting of both domestic and international companies is also an important area for consideration.

“Alternative methods by which the accounting standards can be adopted in financial statements spur an array of tax outcomes. Therefore, companies need to involve their tax functions at an early stage in the annual and quarterly financial statement preparation process to avoid large gaps between the forecasted and actual tax liabilities,” commented Marcel.

Excise Taxes

Discussing the new excise tax law that came into effect from January 1, 2019, EY Indirect Tax Partners, Finbarr Sexton and Jennifer O’Sullivan, were of the view that businesses with excisable goods (with excise tax rates applied on carbonated drinks – 50 %, energy drinks – 100%, tobacco products – 100% and alcohol – 100%) at 31 December 2018 were liable to submit a transitional excise tax return.

In addition, businesses with an excisable inventory value greater than 50,000 QAR were required to have these inventories certified by independent auditors. Businesses that may have stockpiled excisable goods were subject to the new tax on these inventory levels.

Furthermore, EY experts believe that VAT is still on the radar and is expected to be introduced in 2020.



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