Are you interested in starting a business in Qatar? If YES, here is a complete guide plus legal requirement for starting a business in Qatar as a foreigner.
Okay, having provided an in-depth analysis of the top 50 best small business opportunities in Qatar and a series of industry-specific sample business plan templates; we will now analyze in detail the legal requirements, market feasibility and every other thing it takes to start a business in Qatar. So put on your entrepreneurial hat and let’s proceed.
Starting a business anywhere in the world can be a very daunting process. Aside taking care of the several formalities attached to starting up a new business, you also have to come up with a lucrative and feasible business idea. Qatar is one of those countries that is an eye-candy to investors all over the world.
Just like any other country in the world, starting a small business in Qatar needs knowledge, persistence and some helpful contacts in that line. Qatar, officially known as the State of Qatar, is a sovereign country situated in Western Asia. Qatar plans to become and remain one of the major countries in terms of business.
Table of Content
- Why Start a Business in Qatar as a Foreigner?
- Legal Requirements of Starting a Business in Qatar (Tax System and Business Structures)
- Choosing a Suitable Business Location in Qatar as it relates to Zoning
- Basic Insurance Needed to Do Business in Qatar
- Requirements and Procedures of Registering a New Business in Qatar
Why Start a Business in Qatar as a Foreigner?
The country pursues a robust program known as “Qatarization”, under which all joint venture industries and government departments aim to move Qatari nationals to a position of greater authority targeting 50% of the workforce in the industry and energy sector. Qatar, being an investment-friendly country, has one of the richest economies in the world. It is a highly developed country with one of the highest GDPs in the world.
Note that oil and gas are the two cornerstones of the Qatari economy as it has the world’s third-biggest gas reserves and oil holds, contributing more than 70% of the total government earnings, 60% of the GDP and about 85% of export earnings. On a per person basis, Qatar is now the wealthiest country in the world.
Over the years, the Qatari government has been very keen to attract investors globally, and for that, they offer an excellent range of incentives for investors to facilitate their business as well as their investment in Qatar, making company formation in Qatar both lucrative and simple. As we are already know, the very first step when it comes to starting a business is idea generation, the second that follows is company registration.
While planning to start a small business in Qatar, you need to keep in mind that the process of company formation is a crucial process. A registered company is considered to be legal in the government’s eyes. It is an obvious fact and is universal throughout the world.
So, if you’re interested in starting a business in Qatar, to enjoy the incentives provided by it’s vast and rising economy, the following key requirements are very important to establishing a business in Qatar.
Starting a Profitable Business in Qatar as a Foreigner – A Complete Guide
When planning to start up and run a business in Qatar, one of the very first things to have in mind is that your success will largely be determined by your understanding of the market. To have a fighting chance in your industry of choice, you need to have a thorough grasp of the local procedures, players you will be competing with, and ways to make inroads.
By undertaking an extensive feasibility research, you can ensure that every cent you spend on establishing your business in Qatar will be worthwhile.
2. Choose the Right Partner
In Qatar, a company must be wholly owned by a Qatari. A Qatari individual must own at least 51% of the share capital of a company incorporated in Qatar. That is why partnering is very critical to the success of your business. Ideally, partners with similar ideas, values, and ambition make for a solid partnership. Take your time to align with such a partner. This decision will go a long way to make the going very easy for you.
3. Incorporating your Company
Note that to incorporate a company in Qatar, there is a need to follow specific procedures. The process includes registering with the Ministry of Economy and Commerce in Qatar and acquiring a membership at the Qatar Chamber of Commerce and Industry.
Aside all these, a startup is mandated to procure a trade license, signage license, immigration card, and other additional licenses before starting operations.
Other requirements include: depositing a minimum share capital of QAR 200,000, primarily determined by the nature of the business, in a Qatari bank and obtaining residency permits; registering with the Public Revenues and Taxes Department, and registering employee contracts with the Ministry of Labour.
Legal Requirements of Starting a Business in Qatar (Tax System and Business Structures)
First, it’s very important to state that there is no tax on personal per capital income in Qatar. This law also implies that employees can go home with their wages and salaries without deduction of tax. But, an individual who gets into any type of commercial activity with an interest to gain income will have to pay tax, as per Companies Tax Law. The income of Qatari and GCC nationals residing in Qatar, is exempt from tax.
The rate of tax is 10 percent of the company’s Total State Income, paid annually. This fixed rate is however applicable only on businesses, and not on individual income or Personal Tax. Have it in mind that typical business costs are deductible, and losses can be rolled over for a period not more than three years from the original accounting declaration. The rental income is subject to a fixed rate of 10 percent.
In Qatar, tax exemptions are only applicable to revenues on Public Treasury Bonds, Public Corporation Bonds and Development Bonds, Income from shares that comply with conditions in Article 4 of Law No.21 of 2009, small handicraft businesses with less than 3 employees, income of companies working in fisheries, agriculture, aerial, and maritime transportation on condition of reciprocity, and Qatari legal persons residing in the State.
There are no other taxes, as Qatar is among the topmost low taxation countries across the world, which makes it attractive to expats. Meanwhile, Customs Duty for general cargo entering Qatar is about 5%. For temporary imports into Qatar, permission from the General Director of Qatari Customs is necessary, apart from a cheque or bank guarantee to Customs Department towards duty charges for shipment. This will be refunded on producing proof of export from Qatar.
In terms of business structures and legal entities in Qatar, you have to first understand that total or 100% foreign ownership is strictly prohibited under Qatar law and requires approval from the Qatar Ministry of Business and Trade in most industries. Note that before you begin processing the registration of a company in Qatar, it is advisable that you first determine whether the activities of your business will be all open to foreign investors or will require the formation of a joint venture.
In restricted sectors, a simpler and less costly alternative to business setup is to operate through an agency agreement. The regulations relating to the structure and governance of companies are governed by the Commercial Companies Law, Law No. (5) of 2002, replacing Law No. (9) of 1998. However, generally accepted types of business structures that are allowed to operate in Qatar are:
- Simple partnership company
- Joint partnership company
- Joint venture company
- Public shareholding company
- Limited shares partnership company
- Limited Liability Company
- One person company
- Holding company
All the required documentation, conduct, procedures are all outlined in the Commercial Companies Law. In all legal contracts, the language used must be Arabic, and always, the Arabic version will take precedence over the English translation.
Choosing a Suitable Business Location in Qatar as it relates to Zoning
Within the past few years, Qatar has transformed itself into a vibrant country boasting of state-of-the-art malls, amazing stadiums, modern hotels, tallest buildings, world-class infrastructure and gigantic reachable visions. Note that with these massive benefits along with a high standard of living, Qatar is now a major business hub and an ideal spot for setting up businesses.
Note there are few legal company setting options in Qatar including the Free Zones which makes the decision process much easier than any other GCC countries. Have it in mind that these Free Zones aim at providing a level of economic security with regards to the free flow of goods to the local market, in addition to supporting the process of economic diversification.
Slowly, the emergence and adoption of free zones has turned the Middle East countries to be an emerging business hub. Not only that it helps in roping in industrialists from different regions of the world, but it has leveraged the thought-process of business investors to a great extent. These zones have been specially designed to focus and built-in the focused industries and to uplift them at an international level. In Qatar, we have:
- Qatar Science and Technology Park
Located in Qatar’s Foundation Education City, this technology park was established in 2009 with an aim to provide a home to technology-based firms. Note that this zone comes with a lot of incentives that meets the expectations of the business entities.
Some of the renowned companies that bask in this zone are Microsoft, Shell, and GE etc. Some of the activities carried out at QSTP involve: Technology developments, Education and training, New business development, Research and Development etc.
- Qatar Financial Centre
When it comes to the finance domain, Qatar has maintained it’s position as a leading nation. The nation has established a complete free zone that concentrates on the financial aspect. Established in the year 2005, QFC is located in Doha and provides legal and business infrastructure for financial services.
It provides an opportunity to deal with a legal framework that closely works on money managing in the emerging markets. The free zone has extended its limits and now also includes the non-regulated activities
Basic Insurance Needed to Do Business in Qatar
With Qatari government getting more open and accessible to foreign investments, the insurance industry in Qatar is growing massively. If before people saw having life insurance as a luxury for the wealthy alone, now many locals now see it as an alternative method in protecting their family and business welfare. But securing the protection of one’s business and family against unexpected circumstances is something everyone should consider.
It could be protection against untimely death or loss of earnings due to illness or financial misfortunes. It’s very necessary to make sure that your business and family in Qatar are sufficiently provided for should anything happen to you.
Consultants and brokers advise both locals and expats to avail insurance policy early in life, but not to do it in haste as it is your future that is at stake. Note that before you decide on which insurance you need, be sure to weigh the pros and cons of each offer. The following are some of the insurance policies you can choose from based on your needs:
- Term Insurance Plan
- Whole Life Insurance, or whole of life assurance
- Mortgage Life Insurance
- Liability insurance
- Income Protection Insurance(IPI)
- Private Health Insurance
- Critical Illness Insurance
Requirements and Procedures of Registering a New Business in Qatar
Just like we stated above, Qatar is one of the leading economic countries in the world. It has the highest GDP per capita. The corporate tax rate of Qatar is comparatively lower than other countries, while in some specific areas of business, the tax is free.
These are some of the main reason why most of the foreign investors want to set up business in the country. Although you may think business registration in Qatar is complicated, but actually, it’s not. Below are the procedures and requirements of registering your new business in Qatar:
- Reserve a unique company name at the Ministry of Economy and Commerce
First, you have to submit the application for “New Company Registration” and company name reservation to the Commercial Registry and Trademark Department of the Ministry of Economy and Commerce. As of May 2011, company name availability check, reservation and payment can be completed online.
2. Open bank account and deposit the minimum capital: After you must have deposited the start-up capital, you will receive a confirmation letter from the bank. This amount cannot be withdrawn until the company is incorporated.
3. Obtain the approval of the Commercial Companies Control Department on the articles of association
Immediately the company name is approved and the capital has been deposited in the bank, you’re expected to submit the articles of association to the Commercial Companies Control Department at the Ministry of Economy and Commerce for approval. The Commercial Companies Control Department reviews the articles of association to ensure that they are in compliance with the laws and regulations in effect.
4. Authenticate the Articles of Association at the Ministry of Justice (one-stop-shop counter at the Ministry of Economy and Commerce)
The company’s articles of association must be prepared in Arabic in the standard format of the Ministry of Justice. The Commercial Companies Control Department stamps this official form before the parties can proceed to sign it at the Authentication Department.
All authorized signatories must be present before the notary of the Ministry of Justice at the designated one-stop-shop counter for the authentication process. Note that the articles of association must include the following information:
- Company name, annexed with “with limited liability”
- Company location/head office address
- Objectives of the company
- The fixed term of duration
- The start-up capital and the manner in which it has been subscribed
- The restrictions on the transfer of shares
- Names of all shareholders
- The manner in which profits or losses will be distributed between the shareholders
- Names of persons entrusted with the company’s management
- The capital structure
Meanwhile, if any shareholder is an entity rather than a natural person, the entity will need to provide the following documents to the Ministry of Justice before signing the Articles of Association:
- Duly legalized and authenticated Board/Shareholders Resolution approving the incorporation of the company and appointing a representative to sign the Articles of Association
- Duly legalized and authenticated Certificate of Incorporation or equivalent document
- Duly legalized and authenticated Articles of Association of the entity
- A passport copy of the representative authorized to sign the Articles of Association on behalf of the company
5. Register with the Commercial Registry and the Chamber of Commerce and Industry at the one-stop-shop of the Ministry of Economy and Commerce
At this point, you will have to proceed to a now single counter at the one-stop-shop of the Ministry of Economy and Commerce in order to register with the Commercial Registry and the Chamber of Commerce and Industry.
You’re expected to submit a duly completed application form signed by the appointed managers and company representatives, the Chamber of Commerce authorized signatories form, the original authenticated articles of association along with the approved draft, copies of authorized signatories’ ID cards for registration with the Chamber of Commerce & Industry. The following documents must be submitted for registration with the Commercial Registry:
- Duly completed application form
- Copy of the memorandum and articles of association
- Copy of the receipt confirming the payment of the administrative fees due for the review of the memorandum and articles of association
- Copy of the certificate of deposit of the start-up capital at an approved bank in Qatar
- Copies of the partners’ ID cards
Note that the fee for registering the company at the Commercial Registry depends on the company’s scope of activity. The fee to register with the Chamber of Commerce & Industry depends on the capital of the company.
6. Create a company seal: In practice, every company makes a company seal. This is mainly because certain documents must be stamped by the company seal before submission to governmental agencies.
7. Register for taxes and obtain a Tax Identification Number (TIN): To register for taxes at the Tax Department of the Ministry of Finance, the following documents must be submitted:
- Articles of Association
- Copies of the ID cards of the company founders and partners
- The Commercial Registration of the company (CR)
- Appointment and details of the company auditors
8. Obtain the trade and signage licenses from the Municipality of Doha: To obtain the Trade and signage licence, the following documents must be submitted to the Municipality of Doha:
- Commercial Registration Certificate
- Signed lease agreement (signed in Arabic or translated to Arabic). The company premises must be commercial and the lease agreement must be signed by the landlord.
- Picture of the premises
- Copy of the title deed
- A sketch of the logo that will be placed on the office entrance, including the size and the name of the company in Arabic and English
9. Immigration Card
You must apply for an Immigration Card in order to start issuing visas and hiring employees. The application process is done at the Ministry of Interior – General Directorate of Borders, Passports and Expatriate Affairs (Immigration Department).
With so many benefits and exceptionally excellent privileges, Qatar is one of the most favorable countries to start a business in. Qatar welcomes foreign investors all around the world to establish a company in their country. The government of Qatar provides various type of business opportunities to bring more Foreign Direct Investment in the country.
Have it in mind that although Qatar is not a tax-free zone but it has the lowest corporate tax rate in the world. Because of this, a lot of entrepreneurs prefer to go to Qatar to establish their business.
When planning to start a business in Qatar, other very notable requirements include authenticating notarized documents from foreign countries at Qatar embassy, obtaining office space before applying for trade license, and obtaining work visa and residency permit.
Have it in mind that to meet these requirements, you need to know the procedures thoroughly. That is why employing the services or teaming up with the right advisors will go a long way to ensure every criterion for doing business in Qatar is strictly met.