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.
Permanent establishment (PE)
A PE is defined as a fixed place of business through which the business of a taxpayer is wholly or partly carried on. A PE is deemed to include a branch, office, factory, workshop, mine, oil or gas well, quarry, a building site, an assembly project, or a place of exploration, extraction, or exploitation of natural resources. A PE also includes activity carried on by the taxpayer through a person acting on behalf of the taxpayer or in the taxpayer's interest, other than an agent of an independent status.
To date, the GTA has permitted a PE to register for tax purposes and file an annual tax return. However, if a PE is not registered in the commercial register, it is in contravention of the Foreign Investment Law. Following introduction of the tax administration system (TAS) and now Dhareeba, the risk of the GTA querying why the PE has not registered in the commercial register has increased, as the commercial registration number is ordinarily required as part of the tax registration and online filing process.
The Regulations have broadened the scope of PE as follows:
- The definition of a dependent agent for PE purposes has been broadened to include (i) habitual conclusion of contracts and (ii) keeping of goods and merchandise on a routine basis and dealing with it for the benefit of a non-resident.
- Force of attraction rule has now been introduced, which can result in the taxation of any income from activities in Qatar that are not connected to a PE.
- Introduction of an anti-fragmentation rule.
- A provision that states that a complete business cycle or operation can result in a PE in Qatar.