Qatar's Income Tax Law No. (24) of 2018 sets the general tax rate at 10% of the taxpayer's taxable income for the tax year, with a higher rate of no less than 35% applying to specific cases involving petroleum operations, petrochemical industries, and government agreements that do not specify a tax rate.

Who Is Subject to Income Tax in Qatar?

The law provides that the tax is imposed annually on the taxpayer's total taxable income arising from sources in the state during the preceding tax year. Under the law's definitions, a "taxpayer" means every natural or juridical person, or any other entity, obligated to pay the tax or to perform the other tax duties set out in the law, its executive regulations, and related decisions. Income accruing in the state includes, among other items, gross income arising from an activity carried out in the state, in addition to other income categories specified by the law, such as contracts wholly or partly performed in the state and real estate located there.

The General Rate: 10% of Taxable Income

The law expressly states that the tax rate shall be 10% of the taxpayer's taxable income for the tax year. This income is determined on the basis of the gross income arising from all transactions carried out by the taxpayer, after deducting allowable deductions and losses permitted under the law. This rate applies to the majority of taxable persons who do not fall under one of the exceptional cases specified in the law.

The Exceptional Rate: 35% for Petroleum and Petrochemical Operations

As an exception to the general rate, the law provides that the tax rate and all other tax conditions stipulated in agreements related to petrochemical industries, as well as those related to petroleum operations, shall apply provided that the tax rate shall in all cases not be less than 35%. The law further provides that the tax rate stipulated in agreements to which the government, ministries, other government bodies, authorities, or public institutions, or any representative of the government, is a party, and which were concluded before this law came into effect, shall apply; if the agreement does not specify a tax rate, the tax shall be imposed at a rate of 35%.

A Special Case: 5% Withholding Tax at Source

In addition to the two rates above, the law provides an independent tax treatment for amounts paid to non-residents: royalties, interest, commissions, and fees for services wholly or partly performed in the state, paid to non-residents for activities not related to a permanent establishment of theirs in the state, are subject to a final withholding tax at source of 5% of the gross amount. The tax treatment therefore differs according to the nature of the income and the tax status of its recipient, whether a resident subject to the general rate or a non-resident subject to withholding at source.

The Territorial Scope of the Tax

The tax is not imposed on all income regardless of its source; under the law, it is limited to income arising from sources in the state, with certain items of foreign-sourced income of a Qatari project subject to tax in specific cases expressly stated by the law, such as foreign distributed profits, interest, and royalties paid to a Qatari project where they are not effectively connected with a permanent establishment of that project abroad.

How Is Taxable Income Determined?

The law requires the taxpayer to determine taxable income on an accrual basis of accounting used in commercial accounting, in accordance with International Accounting Standards, subject to the provisions of the law and its executive regulations, and the taxpayer may not use other accounting methods without the approval of the General Tax Authority. The taxpayer assesses the tax on the basis of the taxable income shown in the tax return, and the return itself is considered an assessment of the tax and an obligation to pay it on the same day it is submitted, while the Authority retains the power to amend the assessment or make an estimated assessment in the cases specified by the law.

Legal References

For questions about your specific situation, you can ask the Qatar Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.