Firstly, there are certain key questions to ask from the outset, and these answers will dictate the best method of setting up a company in Qatar:
- What is your activity, and where is your target market?
- Do you need a physical presence, are you selling products or services?
- Do you have a Government Contract?
Should I set up with Qatar Financial Centre (QFC)?
QFC has recently opened its doors to more 'non-regulated' companies, allowing them to establish themselves as a 100 percent foreign-owned company. The QFC now offers not only an alternative to having a local Qatari partner but also a simple and affordable alternative.
There are six new categories which can be established under the QFC. One of those is 'the business of providing professional services including but not limited to audit, accounting, tax, consulting and legal services'.
QFC has been 'broadening its interpretation' of 'professional services'. In March 2019, QFC approved a list of 17 additional activities which can be included, which are:
- Information technology consultancy activities
- Advertising agencies
- Architectural activities
- Engineering design activities for industrial process and production
- Engineering-related scientific and technical consulting activities
- Environmental consulting activities
- Media representation services
- Translation and interpretation activities
- Urban planning and landscape architectural activities
- Accreditation
- Logistics planning and consulting
- Project management
- Marketing and brand management
- Specialised design activities
- Event management services
- Estate planning and will writing
- Activities of patent and copyright agents: other legal activities not elsewhere classified
However, these 17 additional activities are not exclusive in that, basically, QFC will consider any 'professional service' - anything qualified as business-to-business and is considered falling within the category and potentially permissible.
What the QFC will not consider as a non-regulated activity is construction, manufacturing, import/sale of goods or labour-intensive services.
Obviously with QFC, there are no foreign ownership restrictions, establishment fees are 5,000 USD and annual fees between 500 and 5,000 USD. As part of the application, QFC will assess the strategic fit and the benefit of your company to Qatar.
Limited Liability Company (LLC) vs Foreign Branch?
Limited Liability Company
The most common method available to foreign investors setting up in Qatar is to incorporate a Limited Liability Company (LLC) and an LLC is often the only choice for many business activities.
Currently, the law states that most Limited Liability Companies must have one or more local Qatari partner(s). The local partners' shareholding should be a minimum of 50 percent in the LLC. In most cases however, a 51 percent shareholding will be held by the Qatar partner.
More Information about LLCs:
- In order to operate as an LLC, a minimum share capital of 200,000 QAR must be available
- Unlike a branch office, an LLC can carry out an unlimited number of contracts simultaneously
- It is mandatory for an LLC to have a suitable office space prior to obtaining a Trade License
- Cooperation tax is 10 percent on the profits of the company
Profits can be allocated in different percentages as agreed by the sponsors and foreign shareholders of the company. With the approval of the sponsors, it is possible for the legal documents of an LLC to contain the following provisions designed to protect the interests of a foreign minority shareholder: appoint all directors, appoint the general manager and through a power of attorney, the business operations of the company can be managed by the foreign shareholder(s).
Foreign Branch Office
Setting up a branch office of a foreign company in Qatar is an attractive prospect for clients in that it can be 100 percent foreign-owned. A branch office is not a separate legal entity but rather an extension of the parent company abroad. As such, a branch office will, when conducting business in Qatar, be acting on behalf of the foreign parent, and as such, be linked to all contracts entered into in Qatar. Depending on the parent company's tax jurisdiction, profits earned by the branch will be taxable in the home country.
In order to establish a Branch Office in Qatar, the foreign company must have a contract that 'facilitate the performance of a public service or utility'.
More Information about Branch Offices:
- Branch offices are only entitled to perform the specific contract for which it is registered
- Branch offices must be authorised by the Ministry of Economy and Commerce
- Branch offices are fully taxable unless granted a special exemption
- There are no share capital requirements for a Branch office
