Qatar introduces significant changes to Income Tax Law

Qatar published amendments to the Income Tax Law (No. 24 of 2018) by way of Law No. 11 of 2022 in the Official Gazette on 2 February 2023, which introduced significant changes that will impact both the tax and compliance obligations of taxpayers.

The Law introduces new provisions for the taxation of certain income arising from sources outside Qatar, including income from immovable property, dividends, royalties, interest, technical service fees, and other services, provided that such income is not attributable to a foreign permanent establishment.

New foreign tax credit provisions provide a credit for foreign tax paid on the foreign-source income that has become taxable in Qatar, subject to certain conditions.

New reporting requirements are introduced in respect of substance and core income generating activities (CIGA). Entities that fail to meet the substantial activity requirements will not be issued with a tax residency certificate in Qatar and will face penalties equal to 15% of net income.

The amendments further introduce ultimate beneficial owner (UBO) requirements, such that companies, partnerships, foundations, etc. must maintain accurate information on their UBOs and intermediaries, with such information to be submitted to the authorities when required.

The powers of the General Tax Authority (GTA) are to be expanded for purposes of tax inspection and exchange of information with competent foreign tax authorities. Resident persons will also be required to provide information on their financial assets (or rights to) abroad at the request of the GTA.

Qatar is a member of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The new law introduces provisions for a minimum effective tax rate of 15%, in line with the Pillar 2 global minimum tax (GloBE) rules, through a qualified domestic minimum top-up tax for in-scope entities.

Law No. 11 of 2022 is generally effective from the date of publication with the application of the changes to be regulated through amendments to the relevant executive regulations.

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