Company Registration In Qatar
Healy Consultants Group PLC
24 November, 2014
There are several industrial incentives to Qatar company registration. Qatar has a large skilled workers population. Along with this, the costs of labor is relatively cheap, and there recruitment procedures are simple. English is the main language of Qatar, with over 60% of the population speaking it; therefore, being the primary business language, communication with employees, customers and suppliers should not be a problem for foreign investors. An additional advantage, and which makes the country popular to foreign employees, is the fact that there is no income or social security deductions required on wages and salaries.
Currently, there is only one industrial free zone in Qatar which is the Qatar Science and Technology Park (QSTP). This type of business entity is completely foreign owned, tax exempt by law, and is allowed to receive residence visa for staff and business owners. This business entity type does not require a Qatari national shareholder, and it is not necessary to hire staff; however, it is mandatory that there is rental of a free zone office. In order to incorporate a QSTP company, the entitys activities must contribute to the advancement of science, technology, or research and development. It is also mandatory that those who wish to start QSTP business submit a full description of their proposed business idea and their research plans. The documents will then be assessed by the QSTP to determine whether such information fits the applicable technology-based criteria. Applicants wishing to start a QTSP company must prove that a significant amount of the monetary investment for the company will be dedicated to research and development. All QTSP limited liability companies must have at least two shareholders with a minimum capital of US$55,000.
Business entities which cannot be completely owned by foreigners include: a limited liability company, a free zone company, a Qatar professional services company, and a foreign branch office and foreign representative office. A limited liability company is the most commonly chosen type of business entity in Qatar. It is required that this type of business entity have a minimum of one director and two shareholders (a Qatari national to be shareholder and/or visa sponsor). Free zone companies include technology companies and financial services companies. This entity is legally excluded from having to pay tax. Typically only large multinational companies are able to form free zone companies. Qatar professional services companies include industries such as: legal and accounting consultancy, IT and management consultancy, and marketing consultancy. There must be a Qatari national who is appointed as a local service agent to sponsor residence visas. The main role of this service agent is to obtain licenses, visas and labor cards. A foreign branch office is basically a branch of a foreign company which is registered in Qatar due to the company completing a specific project through a government contract. The project must focus on one of the following areas: engineering, tourism, construction, industrial, or agricultural. A representative office is 100% foreign owned and controlled, and is therefore prohibited from engaging in direct sales within Qatar. This type of business entity is only allowed to take part in promotion of the business and the parent company, and market research. It is mandatory for a Qatari agent or distributor to be hired to sell goods ad provide services to local companies.
Binding arbitration is a method of dispute resolution which is common used throughout Qatar by foreign entrepreneurs. There are three locations for dispute arbitration in Qatar, these include: the Qatar International center for Arbitration, the QFC Tribunal, and several arbitration center in both Europe and North America. It is required that a company which is a formation of a limited liability company submit an annual tax return. A tax return should be accompanied by audited financial states if the annual profits are greater than QR100, 000. A second requirement, is that all companies must submit an annual return which confirms certain details of the company, such as: named and addresses of all directors, address of principal place of business, and details of shareholders and their shareholdings. Since all business activities which take place in Qatar receive government approvals, permits and licenses, there is no need to register certain products with the government, including: food, cosmetics, medicine, and medical equipment. Shareholders of a Qatari company have additional responsibilities, as they are responsible for appointing, replacing and dismissing company directors. Whereas the directors have the ability to oversee the day-to-day operations of the company.
There are several accounting and tax laws which need to be understood before registering a company in Qatar. A limited liability company set in Qatar needs to put aside 10% of its net profits until the reserve amount stands at 50% of the share capital. All imported goods require customs clearance, this can only be completed once payment of the customs duty is done, which is usually 5%. Releases from customs duty can be acquired for the import of equipment which focuses on certain projects in addition to primary or semi-manufactured materials which are not available Qatar. The country can withhold tax on certain payments to non-residences, these include: 5% on royalties and technical fees, 7% on interest, commissions, brokerage fees and directors fees. The first accounting period in Qatar can last between six and eight months. Companies must submit their financial statements within four months of their financial year end. A number countries are involved in a signed double tax treaty, including: Bangladesh, India, France, Malaysia, Singapore, Tunisia, Senegal, Romania, and Russia.
There are a few challenges in registering a company in Qatar, such as employment, visas, travelling, and costs. A large amount of companies are required to appoint Qatar national shareholder, who must receive a minimum annual fee of US$40,000. It is a challenge to find adequate Qatari employees who can successfully fill a certain job position; therefore, foreign companies employing foreign workers is on the rise. In addition to this, it is known that the government favors companies which will employ Qatari nationals, as opposed to foreign workers. Due to the fact that a large majority of company visas and licenses are sponsored by Qatari nationals, they have indirect control over the business. Foreign investors wanting to register a company are required to travel to Qatar in order to complete company registration and the opening of a corporate bank account. Since Qatar is in high demand and is quite a small country, living and business expenses are rapidly growing. The running of a company registered in Qatar can be expensive due to the several government fees during the company formation, the requirement of office rentals following company formation, the requirement of hiring of staff after company formation, and the high paid share capital of US$55,000 in order to complete the company formation. Along with this, the need for foreign companies to employ expatriate workers results in increased expenses.
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