Starting a business in Qatar: a detailed guide

Political and economic stability, high-quality infrastructure and one of the lowest corporate tax rates in the world (10%) are just a few of the good reasons to open a business in Qatar. Additionally, as part of Qatar's National Vision 2030, the country is investing approximately US$200 billion to achieve sustainable development by 2030. And this is a great opportunity to start a technology business.

Although it is highly recommended that you hire an experienced lawyer or consulting firm when starting a company in Qatar, this guide will help you navigate the basics.

Business landscape in Qatar

More than 85 different nationalities live here. Qatar consistently ranks among the leading economies for competitiveness and innovation.

A country with a dynamically developing economy offers businesses a wide variety of opportunities for growth. Although starting a business in Qatar is difficult and financially risky, there is no need to despair. If you are tired of looking for a job in Qatar and constantly updating your resume, this is a great choice for aspiring entrepreneurs.

Local authorities actively encourage new businesses. For example, Qatar Financial Center — government business and financial organization that helps promote Qatar as an attractive business destination and a bridge between East and West.

Such support is especially important when doing business in a foreign country with such a specific culture. To succeed in a foreign business environment, expats need extensive preparation.

Business culture in Qatar

Life as an investor in Qatar is easier if you are polite and patient. As a rule, Arabs are helpful and friendly if you ask them for advice. They see it as a sign of respect.

However, doing business with Arabs also means difficult negotiations: they are experts at this. As a result, it can be difficult for an outsider to navigate Qatar's business culture.

It is important to understand that answers like “I’ll think about it later” can demonstrate that the agreement will not go further. It is much more useful to observe other signs, because Arabs rarely refuse directly.

Opportunities in Qatar

It is highly recommended to thoroughly research the region and sector before doing business here. The plan should include a study of market conditions, competitors and projected results. It's worth remembering that a credible plan has a higher chance of attracting local support.

Although gas remains a priority for Qatar's economic development, the government is working to diversify the economy by offering incentives to attract business, expertise and investment from abroad.

The government helps businesses gain quick access to leading markets and suppliers, especially in the fields of tourism, manufacturing, healthcare, education, information technology, agriculture, consulting services and other services related to sports, culture and media.

According to the Qatar Ministry of Planning, in the 1st quarter of 2019, the inflow of foreign investment into Qatar reached 722.6 billion Qatari riyals (199.7 billion US dollars), accounting for 67.9% of Qatar's total investment.

Who can start a business in Qatar

Legal requirements

The first step to starting a business as a foreigner — find a service agent or sponsor. An influential sponsor or qualified local partner — a significant advantage in relations with official organizations. After this, the foreign or local company must obtain commercial registration from the Ministry of Trade and Industry (MoCI).

The Business Companies Act specifies all necessary documentation and procedures. All legal contracts must be drawn up in Arabic, and these versions will precede those translated into English.

Financial requirements

Foreign business owners and investors often need to set up a private limited liability company (LLC) to operate in Qatar. It must have a minimum authorized capital of QR 200 thousand and two shareholders. Typically, foreign investors can own up to 49% of the share capital, while one or more Qatari partners must own the remaining 51%.

In certain sectors, the Minister of Economy and Trade may authorize the share of foreign investors to exceed 49% and even reach 100% (if the business is in line with Qatar's development plans).

How to make starting a business easier

The sectors most supported in Qatar include agriculture, education, tourism, healthcare, natural resource exploitation, energy, mining, technical and IT services. The government can offer various incentives to foreign companies investing in these industries. For example, the abolition of income tax for 10 years.

The Qatari government also offers business incubators and free zone platforms to attract foreign direct investment, such as the Qatar Financial Center (QFC). Opening a business through QFC is very easy. After submitting the application, the account manager accompanies the entrepreneur through the process of registration, obtaining a license and starting operations.

Qatar Financial Center

The Government of Qatar opened the Qatar Financial Center (QFC) in 2005 as a business platform to attract international financial service providers. About 670 companies already operate through QFC — internationally and in Qatar — in various sectors: from media and sports to technology and consulting.

Companies from 60 countries are registered with QFC. The center brings together a community of more than 3,500 people. Companies established under the auspices of the QFC may be wholly owned by foreign investors. It's worth noting that QFC charges some fees, such as an establishment fee (around $5K) and annual fees ($500 to $5K). The platform uses them to assess the alignment of the company's strategy and benefits for Qatar.

There is an alternative, simpler solution. Instead of opening a new business, you can buy one that is already working and making a profit (which is always a problem). It does not require raising capital, obtaining sponsorship or registration. All you have to do is agree on a price and take ownership of the business.

Legal structure of business

Business types

According to the Commercial Companies Law No. 5 (2002), the company's headquarters must be located in Qatar. The following types of companies can operate in Qatar.

Joint Company This type provides for two types of partners: 1) joint partners, authorized to manage the affairs of the company and responsible for the company's obligations; and 2) trustee partners, who contribute to the capital of the company (their responsibilities are limited to the value of their share).

The minimum authorized capital for a company of this type is QAR 200 thousand.

Equities Partnership Company. An enterprise of this type consists of two teams: the first with one or more partners jointly responsible for the debts of the company with all their assets; and the second includes shareholders.

Limited Partnership Company. This company consists of two or more Qatari individuals who are personally and jointly liable for the debts of the legal entity. Foreign ownership is limited to 49%. No minimum financial investment is required.

Limited Liability Company. This structure includes from 2 to 50 partners, whose responsibilities are limited by the value of the company shares they own. Foreign shareholders are allowed to hire management and form a limited liability company.

The minimum authorized capital for a company of this type is QAR 200 thousand.

Shareholding Company This company is created on the basis of a shareholding agreement, which must be previously approved by the Ministry of Trade and Industry. It must have at least 5 shareholders, and all of them must be Qataris. In addition, an elected board of directors will be responsible for the management of the publicly traded company. The authorized capital must be at least QAR 10 million.

Particular Partnership Company This type of enterprise may have two or more partners responsible for the company's obligations. They must all be Qataris and each partner has the right to conduct commercial meetings and business events on behalf of the company. It is imperative to first obtain approval before proceeding with any investment.

Freelancer or self-employed. If you prefer to work as a freelancer, you should find a local sponsoring company. It is important to note that this does not require you to travel to Qatar to find temporary or casual work. Short-term contracts can be signed by a sponsor, but independent freelancing is illegal.

Performing any paid work in Qatar without permission from the Ministry of Labor is prohibited by law. Sponsorship may be provided by a legally registered company or individual; you can apply to the company as a self-employed person working as a subcontractor.

How an expat can start a business in Qatar

Before starting a business in Qatar, you should carefully consider what exactly to do. The reason is simple: for expats it is very expensive and involves a lot of bureaucratic procedures. Additionally, in some sectors, foreigners can only own 49% of a company's shares. The remaining 51% must be owned by a local shareholder; Usually, to find a potential Qatari shareholder, they turn to a consulting organization.

An exception is made for companies opened in a free trade zone: in this case, the expat can retain full ownership of the enterprise.

Although the law does not specify capital requirements, a minimum paid-up capital of QR 200 thousand is often suggested. This is done in order to increase the chances of approval of future business. It is also recommended that you obtain the necessary financial assistance from your bank in your home country before leaving. Banks in Qatar will be reluctant to issue a loan, especially to a foreigner who has recently arrived.

The next steps concern registration of a limited liability company (LLC) — the most common legal form of legal entity in Qatar.

Business registration in Qatar

When the preliminary preparation is completed, you can proceed directly to registration. It includes the following steps.

1. Decide on a name for the company. If the desired name does not have a meaning in Arabic, you will have to pay an additional 1 thousand QAR.
2. Prepare a charter with signatures, which will indicate all shareholders and their shares of participation. Send the document for signature to the Ministry of Justice.
3. Send the company name and charter to obtain a Commercial Registration (CR) to the appropriate department of the Ministry of Justice. The application will be considered by different departments of the ministry, depending on the type of activity.
4. Once the application has been approved and all fees have been paid, you will need to return to the Ministry of Economy and Trade (MEC) to obtain an extract from the commercial register. It will only be valid for one year. This document will allow you to open a corporate bank account.

Licenses and permissions

After this, you need to obtain a trade license, which will allow you to acquire office space to conduct business. The Ministry of Economy and Trade must approve this, and this is usually the most difficult part of the process. In addition, plan your time carefully, as the procedure may take a long time.

Once the business is ready to launch, you will need to hire several employees. However, to provide them with a residence permit, you will need a Signature Card (Computer Card or Signature Card) — This is a document that identifies the signatures of authorized persons of the company. It is issued by the immigration service.

How to get a business visa in Qatar

This type of visa allows foreigners to temporarily conduct business and work in Qatar. There are two types of business visas:

• 72-hour: issued upon arrival and can be extended for another 72 hours. People mainly use it for short-term business trips.
• Short-term:Available to new foreign workers and those undertaking short-term contract work in Qatar. It is valid for a maximum of 3 months.

There is also an Investor Visa for expatriates who invest in individual business ventures in Qatar. It gives the right to obtain a residence permit without sponsorship. Applicants must have proof of ownership, a certificate of good behavior and undergo a medical examination.

Opening an online business in Qatar

E-commerce penetration in Qatar is only 20%. And this leaves exciting opportunities for entrepreneurs.

With Qatar's population well connected to the internet and the country boasting the highest per capita income in the world, the potential market for online businesses is huge. In addition, you do not have to reside permanently in the country to be a partner in an online business. You can start it with a business visa.

However, starting an online business will require legal registration. It includes almost the same steps as for a regular company, however, the CR must contain the term “e-commerce activities.” Without this legal procedure, you cannot open a bank account or import products.

It is highly recommended to use the .qa domain for a corporate website. Available options can be found at domains.qa. Use a local, secure payment gateway to make the platform appear reliable and trustworthy. It is also worth exploring the resources available on the e-commerce information portal of the Ministry of Transport and Communications.

Launch of a branch or subsidiary

Subsidiary company — it is a branch of the parent company abroad and may be 100% foreign owned. However, depending on the tax jurisdiction of the parent company, the subsidiary's profits will be taxed in its home country.

Branches are required to obtain permission from the Ministry of Economy and Trade and often require strict contracts with the government. It is better to register a subsidiary rather than a branch. If the business model does not involve trading with clients from Qatar, it is preferable to establish a representative office.

Opening an NPO in Qatar

Qatar law only recognizes the following registered forms of NPOs: associations, foundations, clubs and religious centers. The law does not recognize non-profit companies and does not mention them in the Business Companies Act or legislation relating to foreign investment. The law is also silent on whether the activities of unregistered NPOs are permitted.

Creating an offshore company

If you are considering the possibility of creating an offshore company, it is worth considering the main advantages and disadvantages of such a scheme.

Offshore registration — This is a simple procedure in all popular offshore financial centers and tax havens around the world. This form can provide a wide range of benefits to both the company and its managers.

Business management

Accounting software Nowadays, specialized software helps simplify the management of all aspects of business: tracking and managing invoices, cash flows, orders, VAT returns, budgets, tax reports and so on. One of the most popular accounting programs in Qatar — Tally ERP9.

Accounting books. All accounting books and records are required to be kept for at least five years from the date of registration of the annual tax return (with the tax administration).

Invoices and Labels Businesses in Qatar must use Arabic as the primary language for invoicing, service lists and product labels. However, small quantities of products with English-only labels may be subject to import inspections on a case-by-case basis.

Banking services

A special business account can be opened in all major banks in Qatar. However, to do this you need to have a Commercial Registration (CR) — document confirming ownership of a legal entity.

Opening a bank account

To begin with, a temporary bank account is opened. Then, with the CR in hand, you need to receive a letter from the Ministry of Economy and Trade with permission to open an official business account in Qatar. The account will be activated as soon as the initial deposit is made. It takes one to two business days to activate your account.

Business taxation

An enterprise that is partially or wholly foreign owned must pay taxes in Qatar. Its profits are generally subject to income tax at a flat rate of 10%. This corporate tax rate is comparatively lower than other countries.

Tax is levied on payments by Qatari legal entities to non-resident legal entities that do not have a permanent establishment in Qatar.

In some specific businesses or legal entities that are wholly owned by Qatari and Gulf Cooperation Council (GCC) nationals, no tax is levied. Tax legislation also does not apply to the following expenses:

• private associations and foundations;
• non-profit organizations;
• wages, salaries and benefits;
• gross income from inheritance and inheritance.

Personal tax

Qatar has no per capita personal income tax, which means workers can take home their wages without deducting tax. However, if a person engages in any type of business activity to earn a certain income, he will have to pay tax. In addition, individual households are subject to income tax if they receive income from sources in Qatar.

Other taxes

Qatar currently does not impose business taxes or value added taxes on businesses. Goods from outside the GCC countries are generally taxed at 5%, however some categories, such as tobacco, have higher tax rates. Temporary imports are sometimes not subject to tax.

Recording requirements

In accordance with tax legislation, reporting must comply with International Financial Reporting Standards (IFRS). The taxpayer must also maintain and maintain records and documentation of its activities in Qatar for a period of 10 years after the end of the tax year to which the records and documentation relate.

Declaration

The default tax year end date is December 31. Around this time, you must file your income tax return and pay any tax that is due within four months of the end of the reporting period; for example, until July 31, 2022 for the reporting period ending March 31, 2022.

Any correspondence (e.g., tax returns, withholding tax returns, extension requests) submitted to the Tax Department must be submitted through the Tax Administration System's electronic filing system — TAS. If a company operates through the Qatar Financial Centre, all tax returns are submitted online through the QFC tax portal.

Business insurance in Qatar

Business insurance is essential to protect an organization. Most insurance companies offer a similar range of insurance products. Let's take a closer look at them.

Liability insurance products

General Third Party Liability Insurance. Indemnification for accidental death or bodily injury of any third party or accidental damage to the property of third parties.

Professional Indemnity Insurance. Defends against claims that a professional service provided by the company caused financial harm to the client.

Directors and Officers Liability Insurance Covers the company's directors and officers (managers or executives), covering losses or defense costs resulting from a lawsuit against them in time working with the company.

Workmen's Compensation Insurance Qatar Labor Law requires all workers to be covered by Workmen's Compensation Insurance (also called Employers' Liability Insurance).

Applies to industrial accidents and occupational diseases; it also provides wage replacement and medical benefits to employees or workers who are injured while working for your business.

Property insurance

Property All Risk Insurance. Compensation for accidental physical loss and/or damage to property.

Business Interruption Insurance Compensates for loss of income or gross profit resulting from accidental damage to company property. This is additional insurance; it cannot be purchased separately, only in addition to property insurance against all risks.

Product Liability Insurance. This policy protects the business from any claims of damage or injury caused by the products supplied. This is necessary for the production of cosmetic and medical products.

Hiring staff when starting a business

Basic requirements

After registering a business and receiving a Signature Card, you can hire employees. It is important to note that all employees, with the exception of Qatari citizens who only require a work permit, must have a residence permit and a work permit provided by the employer — a legal entity established in Qatar. Employers must provide foreign workers with an employment contract.

The contract can be written in a second language (preferably English) so that everyone understands it; however, the Arabic version is the only legally valid document that will be officially recognized by the Qatar Ministry of Labor.

Foreign workers must obtain prior approval from the Ministry of Labor and the Ministry of the Interior before they can sign local employment contracts. Depending on the nature of the position, employees will be required to provide a certified copy of their diploma to the Qatar Ministry of Labor as part of the work permit or residence permit process.

In most cases, the employees themselves will need to provide additional information, such as a certificate of good conduct and work history.

Labor rights and responsibilities

Qatar Labor Law governs all labor relations. It provides minimum standards of rights, responsibilities and benefits for workers. Some of them can be found below.

Working hours

The maximum permitted working time is 48 hours per week (8 hours per 6 working days). During the month of Ramadan, working hours are reduced by 36 hours per week (six hours per day).

Recycling

Overtime work should not exceed two hours per day, except when the work is necessary to prevent a significant loss, a serious accident, or to eliminate or reduce the consequences of a serious accident.

Salary

At the time of writing, there is no minimum wage in Qatar.

Vacation

If an employee's work experience is less than five years, he is granted a vacation of at least three weeks per year. However, if the service is five years or more, he receives a minimum of four weeks per year.

Sick leave

After three months of service, employees are entitled to 2 weeks of paid sick leave per year of service.

Maternity leave

After one year of continuous work, women can take 50 calendar days of maternity leave with full pay. However, Qatar does not provide parental leave.

In addition, the sponsored employee must have the sponsor's permission to change jobs, leave the country, rent a house, and open bank accounts. However, sponsors cannot retain the passports of their employees except for any visa formalities.

Qatar has a wage protection system (WPS), which requires employers to pay their workers once a month or every two weeks directly into a local bank account. Some companies operating through the Qatar Financial Center also use WPS.

Taxes and Social Security

Employees in Qatar are not subject to income tax, so the employer has no tax deduction obligation. There are also no social security requirements, only for special cases.

Pension

Employers must transfer contributions to the pension fund, deducting them from employees' wages.

Resources for personnel search

Vacancies can be posted on the following sites:

• job search platforms (Bayt, Monster, Online Qatar, Gulf Talent and so on);
• vacancy sections in newspapers (Gulf Times and the largest newspapers in the country);
• recruitment agencies in Qatar (REED, Doha HR, Workabroad.ph, Global Woman Qatar, Ally International and others);
• job fairs.

Support and advice when starting a business in Qatar

There are many consulting companies in Qatar that provide support to individuals wishing to start a business in the country. They provide financial and legal services, loans and grants, marketing consultations, and can also find Qatari partners for the company.

Assistance can also be obtained from the Qatar Financial Center (QFC), created by the government, which is designed to attract international financial institutions and transnational corporations to the country. QFC is committed to promoting Qatar as a dynamic business center and providing an attractive financial environment.

The institution operates in accordance with international standards and provides legal support and business infrastructure for those who conduct business through it. For organizations operating through QFC, 100% foreign ownership is acceptable. They can send all profits and capital outside Qatar.

Search for office space in Qatar

The country has a wide choice of sites for doing business. Many real estate brokers can provide office space and meeting rooms for rent. On the other hand, Qatar is experiencing a peak in coworking spaces, where you can get the resources of a large business for a small fee.

Qatar Financial Center can also provide affordable office space in a wide variety of locations. In 2019, QFC moved to Doha's new financial district, Msheireb. It features ultra-modern buildings built using the latest environmentally friendly technologies.

However, if you don’t want to pay for a workplace, you can apply for a free coworking space at the Digital Incubation Center (DIC), a division of the Ministry of Transport and Communications.

Business training in Qatar

The Qatar Digital Business Incubation Center is conducting a series of trainings on new technologies and business processes. His goal — introduce aspiring entrepreneurs to the best training specialists in the local market and abroad.

DIC offers two programs: Startup Track — a program to support potential entrepreneurs who already have a product or prototype ready for sale; and Idea Camp — for entrepreneurs, developers and designers who have an idea for a technology solution.

DIC was created to stimulate innovation in the field of information and computer technology in Qatar. It also offers startups free office space, technical support and guidance, in addition to coverage and public relations, which are available to all DIC members.