Qatar Weighs Value-Added Tax Proposal

  • Arab Law

Qatar is taking a closer look at the possibility of introducing value-added tax (VAT) along with other GCC states, suggests a key planning document.

The idea is to take up the long-term challenge of broadening the revenue base and reduce the non-hydrocarbon deficit (which is the overall surplus excluding hydrocarbon revenues).

Backed by a large increase in hydrocarbon revenues, Qatar is expected to post huge surpluses in 2011 as well as this year, raising the share of hydrocarbon income in the total state revenue.

Qatar 2nd Easiest Country to Pay Tax Globally

  • Arab Law

Qatar’s “straight forward” tax system has been recognised worldwide with the country securing the position of “2nd easiest country to pay tax globally” in an annual report issued by PricewaterhouseCoopers, World Bank and IFC.

The report titled “Paying Taxes 2012” cited the Middle East has “fewer and less complex” tax laws in the world. Now in its sixth edition, the report compared tax systems across some 183 countries from a business perspective, revealing that all six Gulf Co-operation Council states fare well within the top 15 countries within the ranking.

Qatar Tax Policy

As part of a delegation of the Bar Council, I just returned from Qatar and was very pleased with the visit. We saw an energetic and enthusiastic country with a great vision. After doing my research and visiting the country, it is clear to me that Qatar has done the homework to become a recognized international player.

Qatar has a wide network of double taxation conventions with 40 jurisdictions, including many OECD and G20 countries as well as important regional partners. These DTCs generally include the old wording of article 26 of the OECD Model Tax Convention. Qatar’s DTCs with France, UK and Singapore contain the current version of article 26. These agreements apply equally to Qatar generally as well as to the QFC.

Qatar is focusing on further developing businesses and investments that will allow the country to continue being competitive beyond their current dependency on fossil energies. The Qatar Vision 2030 outlines clear steps to that end, which are clearly being executed. The 2022 world cup was not in the agenda some years ago, but will definitively help the country to achieve its goals.

In the tax arena Qatar is moving in the right direction as supported by the Law No. (21) of 2009, creating a corporation tax rate of 10% for all companies. According to the OECD report on Qatar