TaxSavvyQA

Indirect foreign ownership breaks the exemption

Our shareholder is a Qatari company but it is partly owned by a European investor. Are we still fully exempt?

The situation

The exemption follows the ultimate ownership by Qatari and GCC nationals. Foreign ownership through a holding company can make part of the profit taxable.

The law

  • Law No. 24 of 2018 on Income Tax (general rate): 10 percent tax on taxable income; 35 percent for petroleum operations
  • Law No. 24 of 2018 and GTA filing rules for Qatari and GCC owned entities: The share of profit owned by Qatari and GCC nationals is exempt, but the entity still files

What it means for you

If the European investor holds 30 percent of your Qatari shareholder, the foreign share of your profit may be 30 percent. On QAR 2,000,000 profit that is QAR 600,000 taxable and QAR 60,000 tax. Look through the ownership chain before using the simplified exempt return.

What to do

  1. Map the ownership chain to the final owners.
  2. Compute the foreign share.
  3. Use the full return if any share is taxable.
  4. Keep the ownership chart in the tax file.

We can do this for youTax return for a fully Qatari or GCC owned company (simplified or full return): QAR 3,000

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