Effective 17 May 2023, the definition of permanent establishment (PE) has been amended. Unless a tax treaty provides otherwise, a non-resident is deemed to have a permanent establishment in Qatar if it conducts business and derives income in Qatar through a fixed place of business through which the business is wholly or partly executed.

Effective 17 May 2023:

An agency PE is deemed to exist in Qatar if a person established therein, other than an independent agent acting in the ordinary course of its business, habitually concludes contracts, or exercises the key role leading to the conclusion of contracts, without material modification by the non-resident;
An insurance PE is deemed to exist in Qatar if a non-resident insurer, other than an independent agent, collects premiums in Qatar or insures risks via a person in Qatar. This applies to direct insurance premium and excludes reinsurance activities; and
An insurance or an agency PE is not constituted in Qatar if the person collecting premiums or habitually concluding contracts is an independent agent and acts for the non-resident in the ordinary course of its business. However, such person is not considered an independent agent if the person in Qatar:

acts exclusively or almost exclusively on behalf of the non-resident; or
is closely related to the non-resident.

The following places of business do not constitute a permanent establishment for a non-resident entity in Qatar:

Using facilities only for the storage and display of goods and merchandise owned by the enterprise;
Maintaining an inventory of goods and merchandise owned by the enterprise for storage or display purposes;
Maintaining an inventory of goods and merchandise owned by the enterprise only for the purpose of reprocessing by another enterprise;
Maintaining a fixed place of business for the sole purpose of purchasing goods or merchandise or gathering information for the enterprise;
Maintaining a fixed place of business to carry out for the enterprise an activity of a preparatory or supporting nature to a project; and
Maintaining a fixed place of business to carry out a combination of any of the above activities, provided that the overall activity of the fixed place of business is only of a preparatory or supporting/ auxiliary nature.

However, a permanent establishment is deemed to exist in Qatar if:

A closely related entity of a non-resident enterprise undertaking the above activities in Qatar performs an activity of a preparatory or supporting nature to the project; or
A person established in Qatar habitually maintains an inventory of goods and merchandise owned by the enterprise or habitually maintains a stock of merchandise in Qatar for habitual delivery in the name of or on behalf of the enterprise.

An entity that has a taxable presence in Qatar is required to apply for a tax registration card with the Public Revenues and Taxes Department (PRTD). In practice, however, the PRTD considers that there is a taxable presence constitutive of a permanent establishment only where the relevant entity is commercially registered in Qatar. Failing that, the income paid to the non-resident would be subject to withholding tax on gross amounts.

Effective 17 May 2023, a non-resident enterprise undertaking the above auxiliary activities in Qatar, and therefore not constituting a permanent establishment in Qatar, is required to register with the tax authority and obtain a tax identification number.

The executive regulations detailing the application of the amendments are yet to be issued.

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