Qatari tax change makes compliance in the region more complicated than ever

qatari tax change

8th March 2019

At 6CATS, we’ve been very vocal about the movement of countries to a complex and comprehensive tax system, and the need for contractors to be aware of the compliance challenges of working abroad. Recently, we have even seen well known ‘tax havens’ implementing stricter regulations. In previous blogs, for example, we have written about how Panama, the world’s premier tax haven, had finally made tax evasion a criminal offence. This week, a similar story has emerged from Qatar. The gulf nation, known to be the richest country per capita in the world, has long been famed for its 0% income tax. However, a Qatari tax change has meant that new laws are being introduced by the country to bring it in line with international standards. Contractors need to be aware of these changes not only as these could affect them if they wish to work in the region, but also because it is indicative of a far wider move to stronger tax systems that will likely be in place wherever they choose to work. So, what do contractors need to know?

Qatari tax change

The Qatari tax change is set to enhance transparency and encourage foreign investment into the country, which is in line with the destination’s vision to diversify its sources of revenue and adopt global taxation standards by implementing a modern and transparent tax system in the country.

The unification of the domestic withholding tax rate at a standard 5% should ease the reporting burden on taxpayers. It is also expected to reduce disputes with authorities on the applicability of a 5-7% charge to non-resident service providers carrying out short-term activities in Qatar, that has previously been billed to Qatari companies.

The change has been praised by those doing business in the country, with a representative of EY commenting that: ‘The new tax laws as drafted provide many opportunities for companies to effectively plan their operations out in Qatar, minimise any tax leakages and meet the enhanced domestic and global tax reporting obligations.’

The latest move of many

This is not the only amendment that the destination has enacted in order to reform and strengthen tax systems. In fact, there has been a number of recent steps taken to boost compliance in the country. For instance, in November 2017, Khalid Bin Rashid Al-Mansouri, the Qatari ambassador to France, signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, along with the CRS Multilateral Competent Authority Agreement? making Qatar the 96th jurisdiction to commit to the Common Reporting Standard (CRS).

However, most recently, the country has established its first dedicated tax and revenue body, the General Tax Authority (GTA). Created to better enforce tax compliance in the country, the GTA has the authority to implement all tax laws, bylaws, procedures and instructions and will also be responsible for the implementation, review and assessment of tax collection.

The GTA will also be able to represent the State of Qatar when relevant international organisations sign tax agreements with other countries to encourage economic cooperation and joint investments. This will help support the goals of the ‘Qatar National Vision 2030’ to ensure the “sustained welfare” of citizens and residents, and improve public services such as healthcare, education, roads and infrastructure.

What does it mean for contractors?

This latest development in Qatar demonstrates that, whatever nation one chooses to work in, no one is safe from scrutiny. With the introduction of global initiatives such as the Common Reporting Standard, authorities around the world have been become far more efficient at identifying inconsistencies or discrepancies and punishing those breaching the law. On top of this, with technological advancements such as blockchain and automation, the speed and accuracy with which jurisdictions will be able to exchange information is only set to grow. Therefore, if you’re a contractor wishing to work abroad, it’s vital that your compliance is at the top of your priority list. Unfortunately, the current regulatory landscape means that this is not an easy thing to do. For this reason, we recommend seeking out help from international experts that specialise in contractor compliance and can handle the complexities that come with it. This will allow your transition abroad to be as seamless as possible, and let us use our expertise to help you focus on yours.

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