Promising winds of change in Qatar

Promising winds of change in Qatar

The drop in the price of oil and different social, political and economic issues arising in the area are provoking changes in one of the most prosperous and competitive economies in the world. This changing landscape should mean new opportunities for businesses.

Oil and natural gas revenues have placed Qatar as one of the highest per-capita income countries, as well as one of the fastest growing economies. However, with the fluctuation of oil prices, Qatar continues to look at new ways and incentives to attract Qatari entrepreneurs and foreign direct investments as a way of diversifying its economy.

One of the recent changes to the country’s tax and regulatory systems includes the introduction of a Wage Protection System (WPS), which came into effect in November. Other developments on the way include a shift in the Qatar Tax Authority’s approach to the taxation of capital gains on the disposal and transfer of shares in domestic companies by non-resident companies.

With the new discussions around tax reforms in the region and the likely introduction of VAT, Qatar and GCC governments will need to make strategic decisions concerning key elements in the system, including harmonization of a number of areas across the GCC to make the VAT system fully efficient and avoid smuggling fo goods between these territories and disloyal competition.

Also, last year’s announcement that the government plans to reduce spending in non-essential areas has set the scene for the private sector to further increase its contribution to Qatar’s economic growth.

Despite the changes, Qatar continues to provide one of the most favourable company tax environments in the world according to World Bank Group and PwC’s report, Paying Taxes 2016. On average, the model company in Qatar has a Total Tax Rate of 11.3 percent of commercial profits, the lowest tax rate in the world. In the Middle East región the average Total Tax Rate reaches 24.2 percent, still miles away from the average of the economies of the rest of the world, where the model company has a Total Tax Rate of 40.8 percent of commercial profits.

The drop in the price of oil and different social, political and economic issues arising in the area are provoking changes in one of the most prosperous and competitive economies in the world. This changing landscape should mean new opportunities for businesses.

Oil and natural gas revenues have placed Qatar as one of the highest per-capita income countries, as well as one of the fastest growing economies. However, with the fluctuation of oil prices, Qatar continues to look at new ways and incentives to attract Qatari entrepreneurs and foreign direct investments as a way of diversifying its economy.

One of the recent changes to the country’s tax and regulatory systems includes the introduction of a Wage Protection System (WPS), which came into effect in November. Other developments on the way include a shift in the Qatar Tax Authority’s approach to the taxation of capital gains on the disposal and transfer of shares in domestic companies by non-resident companies.

With the new discussions around tax reforms in the region and the likely introduction of VAT, Qatar and GCC governments will need to make strategic decisions concerning key elements in the system, including harmonization of a number of areas across the GCC to make the VAT system fully efficient and avoid smuggling fo goods between these territories and disloyal competition.
Also, last year’s announcement that the government plans to reduce spending in non-essential areas has set the scene for the private sector to further increase its contribution to Qatar’s economic growth.

Despite the changes, Qatar continues to provide one of the most favourable company tax environments in the world according to World Bank Group and PwC’s report, Paying Taxes 2016. On average, the model company in Qatar has a Total Tax Rate of 11.3 percent of commercial profits, the lowest tax rate in the world. In the Middle East región the average Total Tax Rate reaches 24.2 percent, still miles away from the average of the economies of the rest of the world, where the model company has a Total Tax Rate of 40.8 percent of commercial profits.

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