Qatar provides a number of incentives for investment in the country. The main incentives are provided under the law regulating foreign investment and through certain free zones. In most cases, the incentives are not automatically granted, and each investment project must be approved.

The following outlines the main incentives provided:

Investment Law Regulating the Investment of Foreign Capital in Economic Activities

Under Qatar's foreign investment law, several incentives may be made available for approved foreign investments in certain industries. A new investment law was introduced in Qatar effective from 7 January 2019, which repeals and replaces the prior law. The incentives under the new law include:

Up to 100% foreign ownership in non-listed Qatari qualified companies;
Up to 49% foreign ownership in listed Qatari companies subject to approval (for foreign ownership exceeding 49%, an application has to be made with the competent authority);
Corporate income tax exemption for up to 10 years;
Right to lease required real estate in Qatar;
Ability to import whatever is needed for the establishment, operation, or expansion of projects in Qatar;
Customs duties exemption on imports of equipment and machinery for the project; and
Customs duties exemption on imported raw materials and inputs not available in Qatar.

The eligible sectors include:

Agriculture;
Healthcare;
Education;
Tourism;
Consultation services;
Artwork services;
Information technology;
Cultural services;
Sports and entertainment services;
Export industries;
Industries that provide new products or use modern technology;
Exploitation and development of natural resources, energy, or mining;
Projects that settle globally well-known industries; and
Projects that take an interest in national cadres and their rehabilitation.

Sectors/activities which are prohibited for non-Qatari investors include:

Banking and insurance activities, excluding those accepted by the Council of Ministers;
Commercial agencies; and
Other activities as specified.

Certain companies are considered outside the scope of the new investment law, including:

Companies licensed by Qatar petroleum to undertake any petroleum operation;
Companies in which governmental bodies participate; and
Companies appointed by the government to exploit, extract, or manage natural resources in accordance with a concession or specific agreement.

Free Zones

Qatari law allows for the formation of free zones that provide a number of benefits for companies established in the zones. Qatar's free zones include the Qatar Science and Technology Park, the Qatar Financial Centre, Airport Free Zone (Ras Bufontas), and Port Free Zone (Um Al Houl).

The benefits of establishing in a free zone include:

100% foreign ownership;
Access to restricted industries, such as banking and insurance;
Tax holiday for 20 years from taxes that include corporate tax, customs duties, and personal income tax; and
Exemption from customs duties.

Taxpayers benefitting from the free zone regime are required to fulfil the substance requirements (see Sec. 12.5.).

Qatar Financial Centre (QFC)

QFC is an onshore regime that operates within its own regulatory framework and permits 100% foreign ownership of QFC entities. A QFC entity can be formed by way of an LLC, partnership, or any other permitted form of QFC entity incorporated in Qatar; or a branch registered under the relevant legislations / regulations made under the QFC Law. QFC entities are permitted to carry on regulated activities such as financial, banking, and investment business; insurance and reinsurance business; funds administration; fund advisory; fiduciary business; and other financial-related business; and certain permitted non-regulated activities.

QFC entities are entitled to various benefits and exemptions, with certain exceptions. QFC entities are not required to withhold taxes on payments of dividends, interest, royalties, or service fees.

QFC entities engaged in financing and investment activities may elect for a special tax-exempt status on the creation of one of the following tax-exempt vehicles:

Registered fund (QFC Scheme or Private Placement Scheme);
Special Investment Fund (permitted activities include private equity investments, venture capital investments, investments in property, and investment on behalf of a single family);
Special Funding Company (includes holding company and special-purpose company); and
Alternative Risk Vehicle.

QFC regime recently issued new tax regulations for extending the exempt status of QFC entities listed on the Qatar Stock Exchange or an approved public market in Qatar for tax years beginning on or after 21 December 2020. The exempt status is granted if the candidate entity fulfils the substance requirements (see Sec. 12.5.). QFC entities are eligible to claim a cash refund for tax losses in their first two years of operation subject to certain conditions, including:

It is a Limited Liability Company;
Its operations were launched after 1 January 2015;
It carries on a permitted activity in or from the QFC;
It has at least 3 full-time employees; and
It has not elected to benefit from exempt status or to be taxed at the 0% concessionary tax rate.

The cash refund is equal to 8% of qualifying losses, and a cumulative cap of QAR 200,000 (~USD 55,000) applies. Only expenses incurred in Qatar, excluding depreciation and interest costs, are eligible for tax credits.

Qatar Science and Technology Park (QSTP)

Companies operating at the Qatar Science and Technology Park (QSTP) may engage in the following activities:

Research and development;
Development of new products and processes;
High value-added manufacturing activities; and
Technological consulting services.

QSTP entities can be fully exempt from Qatar tax and are permitted to import goods and services free of customs duty. However, tax-exempt entities are required to file tax returns and apply withholding tax on payments to non-residents.

Taxpayers benefiting from the QSTP regime are required to fulfil the substance requirements (see Sec. 13.5.).

Other Incentives

Foreign international shipping and aviation companies are exempt from tax in Qatar if Qatari shipping and aviation companies are exempt from tax in those foreign countries.

Not-for-profit entities are exempt from tax in Qatar.

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