Qatar is an attractive country not just for its big bank of oil resources but also for businesses that want to expand their company here. The country appears like a beneficial location for business because of its low tax rates and opportunities for the company’s growth in a flourishing economy with high GDP and high quality of life. However, foreign investors have some restrictions regarding starting a business, but they form a company by co-owning it with a Qatar citizen.
Hence, if you’re planning on setting up a subsidiary in Qatar, then refer to this guide to learn about the laws and requirements to start.
What are the Types of Subsidiaries in Qatar?
Here are the different types of Qatar subsidiaries:
General Partnership Company: This is a company formed between two or more parties. The partners assume joint responsibility for all their funds for the partnership’s obligations.
Simple Partnership Company: A simple partnership is a company that is categorized into two partners as follows:
- Jointly liable partners: A person who runs the company and is jointly liable for the company’s obligations in all their fortune.
- Sleeping partnership: A partner who has invested capital in the company but is not liable for its obligations.
Sole Proprietorship Company: A sole proprietorship company means that in applying the provisions of this law, every financial activity of the capital is wholly owned by one person or corporate entity.
Shareholding Company: This company’s capital is divided equally into tradable shares. Shareholders are not responsible for the debts and liabilities of the company, except for their share value in the company.
Private Shareholding Company: In this company, the minimum number of founding shareholders is at least five people. A private shareholding company must not be publicly listed. The shareholders shall subscribe to all the shares of this company. The company must have a capital of at least two million Qatari Riyals. There are exceptions on provisions like governing public subscription, listing and trading, and private shareholding companies. These are governed by the conditions that apply to shareholding companies.
Limited Liability Company: This company has partners not more than fifty (50) and not less than two partners. Partners are also responsible only for extending their shareholding in the capital. In this case, the tradable shares certificates must not be issued to partners for their stake in the company.
Holding Company: This is a limited liability, shareholding, or sole proprietorship company that financially and managerially controls another or more companies. The controlled entities must own at least 51% in shares or stakes by the holding company shall become subsidiaries of the holding company.
Foreign Companies – exempted by ministerial order: It is a company involved in state contracts licensed by the ministerial order. This is issued under Law No. (13), which regulates the non-Qatari capital, and under Law No. (13) of 2000, regulating economic activities. It must also have a non-Qatari stake that exceeds 49% of the company’s capital.
How To Set Up Subsidiary in Qatar?
Qatar often restricts foreign investments, which can also impact the process of setting up a subsidiary in Qatar. The incorporated entities must have at least 51% shareholdings with Qatari nationals since the country focuses primarily on hiring citizens over foreign workers. Though the country is small, many cities and regions are pretty costly as per the unique laws on Qatar subsidiaries. Working with a professional like a business advisor, lawyer, or accountant is highly recommended to get the best location for a subsidiary business.
The laws for Qatar subsidiaries are also dependent on the type of entity incorporated. One can choose between a partnership, limited liability company (LLC), branch/representative office, or an unincorporated joint venture. The highly preferable option for most companies is LLC while setting up a subsidiary company in Qatar.
Some of the steps to set up your Qatar subsidiary as an LLC includes:
- Reserve a company name.
- Open a bank account in Qatar and deposit a minimum capital.
- Authenticate the articles of association.
- Register yourself with the commercial registry and the Chamber of Commerce and Industry.
- Obtain the trade and signage licenses from the Municipality of Doha.
- Register yourself for tax purposes and obtain a Tax Identification Number (TIN).
- Create a company seal.
Benefits of Setting Up a Qatar Subsidiary
Some of the benefits of a subsidiary company in Qatar are as follows:
- Setting up a subsidiary company in Qatar will allow you to legally start operations in the country.
- Incorporating as an LLC also protects the parent company from litigation or liability, which means that your subsidiary can operate independently.
Documents to Prepare When Opening a Subsidiary in Qatar
To start the process of setting up a subsidiary in Qatar, you will require three major documents in the following order.
1. Commercial Residence, also known as CR.
2. Trade License refers to a legal office space under CR.
3. Computer Card (Also known as Signature Card) required to issue Residence Permits for your employees.
What Business Forms can Qatar Subsidiaries Take?
Some of the most common types of companies for setting up a subsidiary in Qatar are limited liability companies (LLC), the public shareholding company, and branches. In this company, the majority of the business must be owned by a Qatari national or a group of Qatari national shareholders.
Qatar Subsidiary Laws
There are some subsidiary laws to follow when incorporating an LLC in Qatar. Some of the crucial laws to comply with are:
- You must have founding members between two to 50 people.
- Earlier companies were required to have a minimum capital of 200,000 QAR. But in the present day, according to the Commercial Companies Law, you do not need any minimum capital.
Post Incorporation Compliance
Below mentioned are the post-incorporation steps that companies have to follow:
- The companies have to open a multi-currency corporate bank account with a local bank in Qatar.
- Next, you have to register for taxes and get a tax identification number (tax card) from the Tax Department at the Ministry of Finance.
- Then, apply and acquire the company establishment card (computer card), which the Qatar Ministry of Interior issues.
- After this, obtain work visas from the Ministry of Labor and Social Affairs and the Department of Naturalization and Residence to support Qatar business information.
Taxation on Qatar Subsidiary
The taxation on foreign subsidiaries in Qatar is very low. This means that there are negligible taxes on corporate profits and no taxes on employment income. The tax rate in Qatar is 10%, and for gas and oil operations, the rate goes up to 35%. In addition, there is no withholding tax on dividends, no payroll tax or real property tax, and no capital duty. The country also does not levy any value-added tax.
Tax Incentives for Businesses Setting up a Subsidiary in Qatar
Foreign tax credit
According to Qatar’s tax law, the income tax paid outside Qatar is deductible as an expense for determining taxable income if the income is taxable in Qatar.
Other tax exemptions
As per the State regime, one can submit an application for tax exemption for projects considered strategically crucial to the Qatar economy. These exemptions are granted for a period of five to ten years. The applications for an exemption are based on different criteria based on the Qatar tax law.
However, even if the exemption is granted, the entity must file a tax return per the Qatar tax law.
In addition to the above exemptions, there are two special regimes in Qatar which provide different tax exemptions to entities that fulfill other criteria:
- Qatar Science and Technology Park (QSTP)
Qatar has established the QSTP, which is focused on entities associated with research and development (R&D) activities. QSTP entities are entitled to be fully exempt from Qatar tax. However, the tax-exempt entities must file tax returns and apply WHT for payments to expats.
- Qatar Free Zones
The Qatar Free Zone Authority (QFZA) was set up in 2018 as an independent entity for developing Free Zones in Qatar. It also oversees two Free Zones: an Airport Free Zone (Ras Bufontas) and a Port Free Zone (Um Al Houl). The Airport Free Zone focuses on international business services, the aviation sector, emerging technologies, light manufacturing, and logistics hubs. The Port Free Zone focuses on industrial sectors, heavy manufacturing, maritime, logistics hubs, etc.
Other Important Considerations
The Qatar subsidiary setup process requires a significant amount of time and money. Even after all the steps are fulfilled, it might take a few more months for you to be ready to hire employees. Furthermore, you must also employ competent HR staff who are well-versed with Qatar’s subsidiary laws.
Many company executives may have to travel back and forth to Qatar to establish an entity. Thus, they must set their schedules accordingly or partner with a global EOR firm for streamlining the operations of establishing a subsidiary in Qatar.
How Multiplier’s Employer of Record Can Help You Hire & Expand in Qatar?
To ensure that the process of setting up a subsidiary in Qatar is seamless, it is better to partner with a third-party service provider.
A global employment partner like Multiplier can be your guide in this journey. We understand the pain of establishing a local entity overseas. It is a time-consuming process for many companies. Thus, we come into the scene to make the process seamless.
Multiplier can help you with a simplified onboarding process. Our experts can help you hire even without establishing a subsidiary. It also supports understanding the country’s employment laws and complies with them when deciding the payroll for employees.