All You Need to Know About 'Taxes in Qatar'

  • 3 months   ago

Did you know that there is a General Tax Authority of Qatar (GTA) which duty is to perform all the key functions necessary for the effective and efficient administration of the taxes in the country?

GTA covers the following:

• policy and legislation setting

• taxpayer service provision

• assessments and enforcement

• appeals and disputes resolution

• reporting

What is tax and what is the purpose of tax?

Tax is a levy by the government on business profits, individual’s wages, wealth, particular transactions and consumption of certain commodities, and it is usually charged as a percentage of  the assigned base which could be profits, wages, value of goods, etc.

Taxation is one of the several ways to finance the expenses incurred by government to manage an economy. Governments use taxes to fund public goods and services like parks, roads, education and healthcare services and to influence behaviour such as discouraging people from using harmful products (tobacco products, carbonated drinks etc.).

Tax is a levy by the government on business profits, individual’s wages, wealth, particular transactions and consumption of certain commodities, and it is usually charged as a percentage of  the assigned base which could be profits, wages, value of goods, etc.

Taxation is one of the several ways to finance the expenses incurred by government to manage an economy. Governments use taxes to fund public goods and services like parks, roads, education and healthcare services and to influence behaviour such as discouraging people from using harmful products (tobacco products, carbonated drinks etc.).

Why Is There a Tax?

Taxes Benefit Everyone

Taxation is one of the several ways to mobilize governmental revenue to manage an economy and to provide public services. Governments use taxes to fund and support their economic and social development policies for the public interest, to promote public services quality in education and healthcare services fields, to enhance infrastructures like parks, roads, and to influence behaviour such as discouraging people from consuming harmful products (tobacco products, carbonated drinks etc.).

The Qatar National Vision 2030 (QNV2030) is a master vision and roadmap towards an advanced society, capable of sustainable development, with the goal of providing a high standard of living for all citizens and residents, by the year 2030. Contributing to the Qatar National Vision 2030 by creating an additional source of non-hydrocarbon dependent income to be invested in a sustainable, long-term economic growth, taxation will play an increasingly important role to achieve these goals. The high standard of living of a modern society requires collection of taxes to support spending for schools and libraries, roads and highways, hospitals, fire and police services, garbage collection, national defence, and the salaries of government employees.

The State of Qatar applies Corporate Income Tax since 1993 and Withholding Tax since 2010. As part of a collaborative agreement across the Gulf Cooperation Council (GCC), some member states introduced indirect taxes and these taxes expected to be introduced in the remaining member states. Whilst reducing Qatar’s dependence on oil and other hydrocarbons, introduction of additional taxes will help the State achieve its economic and social policy goals and safeguard the future of the country for generations to come.

What other taxes is Qatar considering?

Importance of taxation will continue to increase in the future, however, there are no imminent taxes planned.

Will introduction of indirect taxes impact economic growth of Qatar?

Indirect taxes will contribute to the Qatar National Vision 2030 by creating a source of non-hydrocarbon dependent income to be invested in a sustainable, and long-term economic growth.

The standard of living of a modern society requires collection of taxes to support spending for schools and libraries, roads and highways, hospitals, fire and police services, garbage collection, national defence, and the salaries of government employees.

What is Withholding Tax?

The concept of Withholding Tax:

It is a deduction imposed on any taxpayer who is not resident and not registered in the Commercial Register, for a contract or activity wholly or partly carried out in the state of Qatar, in respect of activities not related to a permanent establishment in the state, at the rate of 5% of the total amount thereof.

Who is in charge of Withholding Tax?

Any natural or legal person resident in Qatar shall be responsible for withholding tax on the amounts paid to non-resident beneficiaries. Such deductions are remitted to the General Tax Authority using WHT Form 2-1.

In accordance with the provisions of Article (9) Paragraph 2 of Law No. 24 of 2018 promulgating the Income Tax Law, effective from the date of issue, which states that:

Subject to the provisions of tax agreements, royalties, interests, commissions and payments for services carried out wholly or partly in the state of Qatar, made to non-residents with respect to activities not connected with a permanent establishment in the state, shall be subject to a final withholding tax at the rate of 5%, as determined by the Regulations.

Taxpayer Charter

Qatar’s tax system is a community asset and all have a role to play in its care and maintenance for a sustainable future. Members of the community play their part by fulfilling their responsibilities under the applicable laws and legislations. As administrators, our role is to build the community confidence in the system that encourage all taxpayers to comply with the legislations.  GTA aspires to give a service that is fair, accurate and based on mutual trust and respect.  The Tax Charter is aimed for everyone who has dealings with us on tax matters,

It provides a clear framework for how GTA staff are expected to act and to deliver services for taxpayers;

It sets out what taxpayers can expect from GTA as well as the obligations they are expected to fulfil.

Taxpayers Rights: What To Expect From GTA

1- Respect you and treat you fairly

Our engagement is to treat you with courtesy, consideration and respect, act in an impartial, professional and fair manneroperate under the assumption that you’re telling us the truth regarding your real tax situation, unless there is evidence to the contrary.

2- Provide helpful and efficient service

GTA assures you to do all that it reasonably can to help you understand and meet your

provide you with updated information in clear and plain language.

offer you a quality services and use your feedback to continuously improve our services.

listen to your concerns patiently and answer your questions clearly.

resolve your concerns, problems or complaints in a timely manner.

3- Respect your privacy and confidentiality

GTA pledges to only ask you for information that it needs to perform our duties.

inform you in advance in case of audit or spot visits except otherwise provided by the Law

protect your information and only use it for purposes the law allows. Your information will only be shared or released when permitted by law.

impose sanctions on tax officials who misuse your confidential information.

4- Behave with integrity and professionalism

GTA recognizes that you should pay no more tax than the tax legally due. GTA commits to apply the legislation with balance, judgement, common sense and without bias, not discriminate against or favour anyone.

always act with due care and diligence; GTA will not abuse your powers.

respect your choice to exercise your legal rights of objection and appeal once GTA has made a decision.

5- Be firm with those who bend or break the rules

GTA recognises that people sometimes make mistakes when trying to meet their obligations. It commits to differentiate between mistakes and deliberate actions, identify those who try to avoid their obligations to the detriment of the rest of the community which GTA forms part of, performs audits and investigations, charges financial sanctions in case you do not meet your tax obligations and other penalties where appropriate according to the Law, issues a tax assessment in case you filed an incorrect return, issues a presumptive tax assessment in case you failed to file your tax return, based on the Authority’s judgement in light of the circumstances, facts and information available, explains to you the reasons, facts, information, and evidences upon which the tax assessment was based on and defining the articles of the Law that were violated.

6- Recognize your right of objection and appeal

GTA acknowledges your right of objection and appeal, and for that it seeks to:

• explain your rights to object and appeal in accordance with existing legislation in full transparency and clarity

• review your case impartially and without delay

• request further information from you, if necessary

• explain to you the reasons, facts, information, and evidences upon which the Authority’s decision was made to approve or reject the objection or appeal.

7- Recognize your right to be represented by someone else

GTA recognizes and respect your right to be represented by any person of your choice on taxation matters and dealings with us. You are required to provide written authorization for any person who acts on your behalf or to discuss your tax affairs with us, keep it informed of any changes.

You are still responsible for the accuracy of information given us and timeliness of submissions, even if someone else, including a tax representative, helps you to prepare and submit tax returns or other tax documents.

Taxpayer obligation: What GTA Expects From You

1- Be honest and respectful 

You are expected to provide correct information on your tax returns, activity statements and other documents on time. Providing the full facts and circumstances when you seek advice would be in your benefit. Answering its questions completely, accurately and honestly is imperative to get the assistance you seek from us. GTA asks that you treat us with the same courtesy, consideration and respect is expected to give you.

2- Know your responsibilities 

You are expected to know your compliance requirements under the law. Make sure to know how to register to the tax system, file your tax return, pay your tax and claim refund payments on time. GTA wants you to get in touch with it as soon as possible if you need help. If you are having trouble meeting your obligations, you should disclose it right away. If you do not meet your tax obligations the legislation provides for the imposition of penalties.

You are responsible for your affairs even if someone else, including a tax representative, helps you.

3- Take reasonable care & act in a timely manner

GTA is expected to take reasonable care to avoid mistakes when providing complete and accurate information on documents you are required to provide to meet your tax obligations. Sending it tax returns and forms in the required format within the prescribed time frames, paying the full amount of your taxes by the due dates, and withholding and remitting by due dates all taxes withheld or collected on behalf of others are your key responsibilities.

4- Keep accurate records in the proper format in accordance with the law

You are expected to prepare and keep sufficient and updated records, and to issue tax invoices as required by law. Good record keeping will allow you to prepare accurate tax returns and activity statements and getting back your tax refund while enabling you to be ready in the case of an audit.

5- Be cooperative

GTA wants to work with you in a collaborative manner, providing you with guidance to meet your obligations voluntarily. You are expected to work with it and comply with requests for further information and give it all the relevant facts. You are required to inform the authority of any errors, omissions or mistakes that have been made in your tax return, form or any information you provided. If you are uncooperative or obstructive, it may need to take firmer action.

What Is Excise Tax?

Excise Tax represents an investment in Qatar’s future by building a healthier society.

Excise Tax is a consumption tax that applies to specific goods generally deemed harmful to human health, with the aim of reducing consumption.

Excise Tax revenues will be invested in improving public services including hospitals, infrastructure, and education. This reform will contribute to the achievement of The State of Qatar’s social policy goals as part of the 2030 National Vision and help secure a sustainable future for The State of Qatar and its generations to come.

The following goods are subject to Excise Tax:

Carbonated drinks (non-flavored aerated water excluded) – 50% tax rate

Energy drinks – 100% tax rate

Tobacco products – 100% tax rate

Special goods – 100% tax rate

As a consumption tax, Excise Tax is ultimately borne by the final consumers, but collected earlier in the supply chain by taxable persons (importers, producers or tax warehouse keepers). Excise tax is triggered once the excise goods are released for consumption. This illustration demonstrates how Excise Tax works throughout a supply chain:

 

 

What is Income Tax?

 

Pursuant to the provisions of Act No. 24 of 2018 promulgating the Income Tax Law, and effective from the date of issue, the tax rate will be 10% of the taxpayer’s taxable income for the tax year.

Income tax in Qatar is levied on the basis of the source of income, with limited exceptions. In general, Qatar-sourced income earned by individuals or resident corporate bodies is subject to income tax at a rate of 10%, whereas the earnings of resident legal persons are exempted by the percentage of dividends of Qatari natural persons and by the percentage of entities wholly owned by Qataris, as well as entities partly owned by Qataris, by the percentage of their dividends therein.

A different tax rate may apply to entities operating in the oil and gas sector or of which the Government, ministries, or other government agencies, bodies or public institutions are part owners.

With the exception of the profits of the wholly or partially, and directly or indirectly, State-owned entities, operating in the field of oil and petrochemical industries.

In this regard, and without prejudice to the provisions of article 9 (paragraph 2, second clause) and article 13 of Law 24/2018, the provisions of Law 24/2018 do not apply to the following:

• Ministries, government agencies and public bodies and institutions.

• International organisations and their branches operating in the country.

• Associations, private institutions and private institutions of public interest, established in accordance with the provisions of the law governing each of them.

• Salaries, wages, allowances and the like.

• Total bequest and inheritance income.

• Complying with the deduction at source obligation applies to amounts paid to non-resident individuals or legal entities by any entity in the State of Qatar.

Source: General Tax Authority of Qatar

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