There are a few ways to set up a company or a business presence in Qatar. Foreign investors are welcomed in Doha and Qatar and various incentives are available, including tax breaks and exemptions from customs duty for many years.
To invest in the economy a local partner is generally required. The local Qatari partner must hold 51 % ownership (we have the same law in Dubai and UAE, except for the Free Zone, where people can have 100% of the ownership). The Ministry of Business and Trade may permit foreign investors to own more than 49% of a company in some specified sectors, namely, agriculture, industry, health, IT, education, tourism, and the development of natural resources, energy or mining.
Below there is a general description about the ways to set up a company or a business presence in Qatar and a detailed summary of the bureaucratic and legal hurdles to incorporate and register a new firm in Qatar.
Choosing the most appropriate business medium
Establishing a Company
In order to do business in Qatar and establish a local office, foreign and local companies are required to obtain a commercial registration from the Ministry of Business and Trade. Qatar enacted Law No. 25/2005 (the ‘Commercial Registry law’) states that no individual person or single entity may engage in commercial activity before registering in the Commercial Registry maintained by the MOBT.
Limited Liability Company
The general rule Law No13/2000 (the ‘foreign Investment Law’) is that non-Qataris, may invest only through the medium of a joint venture company incorporated in Qatar in which one or more Qatari persons or 100 percent Qatari-owned entities hold no less than 51% of the share capital. Joint venture companies with Qatari partners are allowed in all sectors of the economy excluding commercial agencies and real estate. Foreign partners in partnerships must pay the full amount of their contribution of share capital to an authorised financial institution in cash prior to obtaining the Companies’ Commercial Registration. The minimum share capital for a Limited Liability Company is Qrs200,000. The Company is required to set aside 10 percent of it’s net profits until the reserve stands at 50 percent of the share capital. The parties’ profit shares do not necessarily have to reflect their shareholdings.
100 percent foreign investment
Subject to an exemption from the Ministry of Business & Trade, the Foreign Investment Law allows foreign firms 100 percent ownership of the share capital of companies developing projects in the fields of agriculture, industry, health education, tourism, IT, exploitation of natural resources and mining. However, this 100 percent ownership is pending the approval from the government. Each application is reviewed on a case-by-case basis, by the Ministry of Business and Trade. Although there is paperwork to be filed, approvals to be obtained and registration fees to be assessed during this process, the mode of registration offers the opportunity for foreign companies to operate independently. However, it should be noted that only a small number of foreign companies have received the Ministerial approval to operate as a 100% wholly owned subsidiary.
The Foreign Investment Law contains provisions that, subject to an exemption from the Minister of Business & Trade, a branch of a foreign company can be registered in Qatar if that foreign company has a contract in Qatar which is performing a specific project, which “facilitates the performance of a public service or utility”. This registration does not allow for the foreign company to conduct commercial activity that is not related to the specific contract for which it is registered. Foreign companies registered under this category do not need a sponsor or Service agent. The Branch Office will be fully taxable unless it is granted a special exemption.
The foreign company does not establish a presence in Qatar, instead an agent is appointed to market goods and services within Qatar. A commercial agent generally acts as the exclusive provider of services of the foreign principal or exclusive seller in Qatar for foreign produced goods. Those companies planning to have agency agreements with Qatari firms are encouraged to review Law No. 8/2002 (‘the Commercial Agents Law’). Under a registered agency, commission is payable on all sales of products in Qatar, even if the sales are not due to the activities of the agent. It should be noted that it is difficult to terminate an agency agreement even if that agreement was for a fixed term period.
Representative Trade Office
The Decision of the Minister of Business and Trade No142/2006 provides that foreign firms may open a representational office without a local partner. Such offices may not conduct any financial transactions related to the company’s commercial activities in Qatar and are therefore not subject to taxation. Though the representational office may be registered in the Commercial Registry and employ staff in its own name, it really is a ‘shop window’ used to promote a foreign company in Qatar and introduce its products to Qatari companies.