Free zone holiday and Pillar Two
Does our QFZ tax holiday protect us from top-up tax?
The situation
The Pillar Two law overrides conflicting domestic measures, so free zone entities may be in scope.
The law
- Law No. 22 of 2024 amending Law No. 24 of 2018 (global minimum tax): IIR and DMTT at 15 percent for MNE groups with EUR 750 million revenue in two of the four prior years, for years from 1 January 2025
- Qatar Free Zones regime (QFZA): 100 percent foreign ownership and a tax holiday of up to 20 years on QFZA terms
What it means for you
Include QFZ entities in the Qatar effective tax rate calculation. A holiday that gives 0 percent can create a top-up close to 15 percent of excess profit for an in scope group. Weigh this before relying on the holiday in group planning.
What to do
- Include QFZ entity.
- Compute ETR.
- Model top-up.
- Review holiday value.
We can do this for youPillar Two scoping, DMTT and IIR readiness for groups with Qatar entities: QAR 18,000