Qatar has one of the fastest growing global economies thanks to the third largest concentration of natural gas reserves in the world. Recent legal liberalisation, economic diversification and an expanding economy provide many investment opportunities for non‑Qataris. Investors can enjoy unrivalled world connectivity via Hamad Port, one of the largest in the region, and the world’s best airport, airline and air cargo carrier. Profits can be repatriated as can proceeds of sale and capital on liquidation. Major investment sectors are construction, oil and gas, education, and financial and legal services, with opportunities in ICT, sport, leisure and healthcare.
Qatar ranks first among the world’s top destinations for foreign direct investment (FDI), thanks to strong economic and investment momentum, according to the Investment Promotion Agency Qatar (IPA Qatar).
Qatar is number one on the ‘FDI Standout Watchlist 2023’ by fDi Intelligence thanks to a robust economic and investment outlook for the year, and the International Monetary Fund (IMF) predicts that Qatar’s fiscal balance prospects will also remain strong in the coming years. The latest ‘Investment Monitor’s FDI Report 2023: A Focus on the Middle East & Africa’ states that Qatar has seen a six-fold increase in FDI, becoming the fifth largest inbound FDI market in the MENA region.
IPA Qatar released its 2022 Annual Report in May 2023, which showed USD29.78 bn (approx QAR108.4 bn) in FDI capital expenditure. Qatar’s strong economic growth and attractive investment prospects led to 135 new FDI projects and the creation of 13,972 new jobs. Over 800 new foreign commercial establishments were initiated, while the agency established and expanded key partnerships with organisations and also released its first multilingual ‘Guide to Investment’.
The government welcomes foreign participation in joint ventures, with a number of incentives for investment:
- A developed infrastructure and ICT network.
- Easy access to world markets with good sea and air connections, continuously being upgraded.
- Natural gas, electricity, water and petroleum at subsidised rates.
- Land for development in the Industrial Area near Doha for nominal fees – companies can submit a request to the Ministry of Municipality for a lease contract of a plot under the Doha, Al Khor, Al Dakhira and Al Shamal Municipalities.
- Loans available from Qatar Development Bank.
- Fixed parity between the Qatari riyal and US dollar (USD1 = QAR3.64).
- No customs duty on the import of plant machinery; exemption from export duty.
- Five-year renewable tax holidays (based on government approval).
- No income tax on the salaries of expatriates.
- Tax on the profits of foreign-owned stakes in Qatari companies applied at a flat rate of 10%.
- Employment and immigration rules enabling the import of skilled and unskilled labour.
There are primarily two regulatory jurisdictions for foreign investors seeking to conduct commercial business in Qatar: the regulations of the State of Qatar, and the rules and regulations of the Qatar Financial Centre (discussed in more detail below).
Qatar also recently introduced new free zones designed to encourage certain bespoke investment vehicles to bring their businesses to the region.
Non-Qatari investors may only invest in Qatar in accordance with Foreign Investment Law No 1 of 2019:
- In January 2019 the Amir promulgated the new foreign investment law of 2019. According to the new law, foreign investors are permitted to hold more than 49% in commercial companies with special permission from the Minister of Commerce and Industry (MOCI) (subject to some prohibitions set out below). Under the former law such increased ownership was limited to those businesses operating in a specific set of sectors.
- Non-Qatari investors are prohibited from being appointed as commercial agents under Commercial Agencies Law No 8 of 2002, but the former prohibition preventing foreigners from investing in real estate businesses has been removed under the new Foreign Investment Law. Approval from the Council of Ministers is required for foreign investment in banking and insurance.
- Foreign capital is protected against expropriation (although the State may acquire assets for public benefit on a non-discriminatory basis, provided the full economic value is paid for the asset).
- Subject to Ministerial approval, a foreign company performing a specific contract in Qatar may set up a branch office if the project facilitates the performance of a public service or utility.
- A non-Qatari company operating in Qatar under a Qatari government concession to extract, exploit or manage the State’s national resources is exempt from the Foreign Investment Law. In practice this covers all large oil and gas companies.
- A company formed by a non-Qatari entity with the government or a government entity (‘Article 207 Company’) may be subject to special rules and exemptions from the Commercial Companies Law No 11 of 2015.
- All international companies securing mega infrastructure development work must share at least 30% of the contract with local entities.
- Law No 7 of 1987 governs the practice of commercial activity by GCC citizens in Qatar, and was amended in April 2017 under Law No 6 of 2017. GCC citizens as individuals or legal personalities can practice retail and wholesale trade in Qatar. However, the GCC citizen engaging in the activity must be directly responsible for it. Those undertaking retail business must do so via direct sale to customers in a shop, and those in wholesale trading are required to import and export the goods. NB: following the signing of AlUla Declaration regarding the blockade against Qatar, legal advice is recommended for this type of commercial activity.
- Law No 12 of 2020 regulating the partnership between the public and the private sector became law in July 2020, as per one of the following regulations: Allocation of land through a rental or usage licence, for development by the private sector; build-operate-transfer (BOT); build-transfer-operate (BTO); build-own-operate-transfer (BOOT); operations and maintenance (OM); or any other form adopted by the Prime Minister, upon the proposal of the relevant minister. The Government or other administration may, on its own initiative or at the suggestion of the private sector, identify a project for its implementation through partnership.
Choosing A Business Structure
To conduct business in Qatar on a regular basis, foreign investors are required to establish or register a legal presence from the following options:
- Incorporating as a company under the Commercial Companies Law which allows full access to Qatar’s market and to work on an unlimited number of projects. A Qatari partner is required to own 51% of the capital of the company, except in the circumstances mentioned above. Various exemptions are available to attract foreign capital.
- Obtaining a licence for a branch office or trade representation office which does not require a Qatari partner. The licence for a branch is granted in respect of a specific project for a government client. The existence of the branch office is dependent on the duration of a particular project: once the project is completed, the branch office must close unless it has secured additional qualifying projects. Branch offices are only permitted to perform a specific contract and may not engage in general commercial activities with the larger local market. The branch will be fully taxable unless granted a special exemption. Trade representation offices are only permitted to market goods and services; they are not permitted to engage in commercial activities.
- Under Law No 7 of 2017 companies in GCC states can now establish companies in Qatar, subject to having had a commercial registration in one of the GCC states for at least three years, and be fully owned and managed by a GCC citizen. Refer to the preceding caveat in Investment Regulations regarding the blockade.
- Appointing a commercial agent means a non-Qatari company does not establish a presence in Qatar; instead a 100% owned Qatari entity or Qatari national is appointed as an agent to market the relevant goods and services. Commercial agencies must be exclusive and registered in order to be afforded the protections provided under the Commercial Agents Law No 8 of 2002; non-registered distributorships are subject to the Commercial Law No 27 of 2006.
- There is a separate regime for establishing an entity in the Qatar Financial Centre (QFC). This allows 100% foreign ownership and aims to attract international financial services companies and some professional support companies to invest in Qatar. The number of permitted activities in which a QFC firm may engage has been increased to include a broader spectrum of investment options.
- The Qatar Science and Technology Park, a free zone in Education City, allows companies to engage in research and development, again with full foreign ownership.
- The new Qatar Free Zones have started accepting applications and international investors, at these zones:
° Um Alhoul, a 30 sq km site adjoining Hamad Port, south of Al Wakra – offers easy access to the water for maritime and logistics companies, and is a gateway for imports and exports. A port and marine cluster, ‘Marsa’, is able to support a wide range of marine businesses.
° Ras Bufontas, a 4 sq km site adjacent to Hamad International Airport – a technology and manufacturing hub for businesses requiring international connectivity.
- The Cabinet has added some areas to the Free Zones Law, including Msheireb Downtown Doha.
- Under Ministerial Decision No 242 of 2016, the MOCI will grant licences for small businesses at home conducting certain commercial activities including sewing, events services, electronic services, business services, cosmetic activities and food activities. A single license is issued per activity, with an annual fee, and cannot involve direct sales to the public from the residence. Decision No 163 of 2018 cancelled the requirement for signage at the house entrance.
According to the Commercial Companies Law No 11 of 2015, the following structures are permitted:
- Limited liability companies (LLCs) – subject to the Foreign Investment Law can now be established by a single person owning the entire share capital (previously the minimum number of shareholders was two). This replaces the single person company under the old companies law. Shareholders can determine the share capital of an LLC (previously the minimum share capital was QAR200,000 divided into equal shares).
- Article 207 company – a shareholding company where the Qatari government, a government owned entity or a public corporation must own 51% of the shares, unless the Council of Ministers consents otherwise. Certain provisions of the Commercial Companies Law are excluded from the company’s Articles of Association.
- General partnership – joint partners administer the affairs of the company, and trustee partners contribute to the company’s capital.
- Simple limited partnership – a local entity formed by two or more Qataris.
- Limited partnership with shares – formed by joint partners, liable for the debts, or trustee partners, whose liability is limited to the share value.
- Unincorporated joint venture – formed by two or more people pursuant to specific contractual arrangements. The unincorporated joint venture does not have a separate legal personality distinct from its partners.
- Joint stock company (public or private) – the capital is divided into shares with a minimum of five shareholders. Permissible foreign share ownership depends on the type of company and is subject to Qatar Financial Markets Authority approval.
- Holding company – incorporated as a joint stock or limited liability company. The holding company must hold at least 51% of the shares in each of the companies under its control.
Commercial Registration (CR)
Virtually all companies use a government liaison officer or facilitator to assist with establishment formalities. Under Qatar Commercial Registration Law No 25 of 2005, companies must be approved or registered by one or more of the following entities: Ministry of Commerce and Industry (MOCI); Qatar Chamber; Ministry of Municipality; Ministry of Interior; Importers’ Register/Contractors’ Register; and QFC Authority (where appropriate). Visit moci.gov.qa for details.
Amendments were made under Law No 20 of 2014 in order to expedite registration procedures, followed by Decisions 30 and 31 of 2019:
- The MOCI must respond to the applicant’s request for registration on the same day.
- Reasons must be given for rejected applications. The Minister must accept or reject an appeal of the Ministry’s decision within 15 days.
- Incorporated branches must be in the exact name of the principal company, and are not considered separate legal entities.
- Amendments have also been made to penalties for those operating commercial premises without a CR, misusing the CR, and providing false/wrong documents.
- Renewals, trade name changes and other modifications are now online services only at investor.sw.gov.qa