The EU’s Economic and Financial Affairs Council (ECOFIN) formally removed Qatar from the state-of-play document – known as the ‘grey list’ – when it issued its conclusions on the revised EU list of non-cooperative jurisdictions for tax purposes on 17 October.
It confirmed that Qatar had fulfilled its commitments to implementing tax good-governance principles by amending its foreign-source income exemption (FSIE), which the EU had identified as ‘harmful’. Qatar is now listed among the jurisdictions that cooperate with the EU and has no pending commitments.
Qatar amended certain provisions of the 2018 Income Tax Law in February, which included amending its FSIE by expanding the types of income that are subject to tax in Qatar.
Income from foreign dividends, interest, royalties and technical service fees, and immovable property located abroad are now subject to income tax in Qatar where such income is not attributable to a foreign permanent establishment of a Qatari entity. Relief will be granted for foreign tax paid on foreign income, but this relief is limited to the corporate income tax liability in Qatar and is subject to the fulfilment of certain conditions.
“Qatar has increasingly been emerging as a legitimate location for international companies to establish a base in the Middle East region,” said Paulina Zalewska-Dzieciuchowicz, Qatar Country Manager at Sovereign PRO Partner Group.
“As demonstrated by its various programmes, platforms, initiatives and reforms, Qatar is fast aligning with international best practices in taxation, regulation and doing business. These changes are all aimed at streamlining Qatar’s business environment and attracting business development.”
Qatar was one of four jurisdictions to be removed from the grey list. Jordan also fulfilled its commitment to amend a harmful tax regime, while Montserrat and Thailand fulfilled all their pending commitments related to country-by-country reporting of taxes paid.
Meanwhile, Antigua, Belize and Seychelles were added the blacklist of countries that do not cooperate with the EU or have not fully met their commitments. All three jurisdictions were found to be lacking in respect of the exchange of tax information on request.
Three jurisdictions were also taken off the EU blacklist: the British Virgin Islands for amending its framework on exchange of information on request, Costa Rica for amending the harmful aspects of its FSIE regime, and the Marshall Islands for making significant progress in enforcing economic substance requirements. The BVI and Costa Rica were moved to the grey list, the Marshall Islands was removed altogether.
For further information on Qatar please contact Paulina Zalewska-Dzieciuchowicz.