Qatar

It is important to recognise that residence is not the basis used to determine whether an entity is taxable for CIT purposes in Qatar. Accordingly, a CIT exposure in Qatar may arise even if a company is not resident in Qatar. However, residence is relevant when considering whether WHT will apply on payments received rather than CIT.

A company is resident in Qatar if it is incorporated in accordance with Qatari laws, its head office is situated in Qatar, or its place of effective management and control is in Qatar.

Corporate residence

On 2 February 2023, Qatar published Law No. 11 of 2022 amending several provisions of the Tax Law. Following this, amendments to the ERs were also published recently on 16 May 2023. The amendments are effective from the date of publication.

The following are the key changes related to corporate residence that were introduced in the amendments.

• The amendments have replaced one of the previous residency tests for corporates from “effective place of management” to “main
  and actual place of administration”. This new test encompasses effective place of management with reference to “senior strategic
  functions” as well as expands the residency test by referring to “carrying out daily business activities”.
• In addition, the amendments also removed the previous reference to “centre of vital interests” as there were some ambiguities related to this residency test under the Tax Law.

Permanent establishment (PE)

The amendments to the ERs also introduced the following ke changes related to PE.

Fixed place

The amendments expand the scope of a fixed place PE to include ’sales outlet‘ and ’warehouse providing storage facilities‘, which would create a PE in Qatar.

Preparatory and auxiliary activities

The amendments introduce new exclusions for preparatory and auxiliary activities that should not constitute a PE. These exclusions are
accompanied by anti-fragmentation and anti-avoidance provisions. It is important to note that in certain circumstances, entities engaged in preparatory and auxiliary activities (even in the absence of a PE) will be required to comply with registration and notification requirements. This is a significant change, as such entities will be required to register for tax purposes with the GTA and obtain a Taxpayer Identification Number through Dhareeba.

Changes to Dependent Agency in connection with a PE

The regulations lay a strong emphasis on “exclusivity” and “semi-exclusivity” tests in determining the existence of a ‘Dependent Agent’ PE. Since there is no definition of ‘semi-exclusivity’, it can create considerable uncertainty in determining ‘dependency’ in certain circumstances. Determination of the existence of ‘dependent agency’ solely on the basis of ‘exclusivity or semi-exclusivity’ appears to deviate from current OECD guidance on this matter.

Insurance activities

The amendments state that except for reinsurance activities, certain foreign insurance companies collecting premiums from
Qatar or insuring Qatari risks may now be considered to have a PE in Qatar. This change can have a significant impact on non-Qatari
insurance companies.

Additionally, the amendments provide further clarity on the ‘force of attraction’ rules in relation to an enterprise that has a PE in Qatar
and also carries out same or similar activities to those carried out by its PE.