In Qatar, the term “business activity” is defined as any profession, vocation, service, trade, industry, speculation, contractual work, or any business carried on for the purpose of making a profit or income. This also includes the exploitation of moveable or immoveable property, such as real estate. Income tax is levied on all foreign businesses operating in Qatar, whether the business is considered a natural person or a legal entity. Fortunately, people working in Qatar enjoy tax-free salaries.
As of January 1, 2010, the corporate tax rate for foreign-owned companies is a flat rate of 10 per cent, which replaces a previously progressive rate. This flat rate applies to business revenues only and not to those of individuals. Normal business expenses are deductible and losses may be carried forward to a maximum of three years. Individuals, which is defined as either natural persons or corporate entities, are taxed on the taxable income derived from the State during the previous taxation year.
Income from the State includes gross income from:
- An activity carried on in the State
- Contracts performed in the State
- Real estate in the State, including the sale of shares from companies or partnerships whose primary assets are real estate
- Services paid to head offices, branches, or related companies
- Interest on loans obtained in the State
Income from natural resources and gross income are subject to tax under a double taxation agreement while rental incomes and capital gains from any business activity are taxed at the 10 percent flat rate.Tax Exemptions
Any capital gains not related to businesses are exempt, but tax exemptions also exist for:
- Interest and returns on public treasury bonds, development bonds, and public corporation bonds
- Dividends and other income from shares
- Small (three employees or less) handcraft businesses
- Income from agriculture and fishing and air and sea transport companies
- Qatari natural persons in the State