Qatar plans to slash corporate tax on foreign companies to a flat 10% starting next year as part of efforts to attract more foreign investments.
“There is a (new) tax bill and once promulgated it will bring down the (tax) rate to 10%. It would be implemented as of 2010,” Finance Minister HE Yousef Hussein Kamal said yesterday, addressing senior budget officials of the Middle East and North Africa and Organisation for Economic Co-operation and Development countries.
At present, Qatar’s corporate tax has seven slabs with incomes up to QR100,000 having no tax, QR101,000-500,000 (10%), QR501,000 to less than QR1mn (15%), QR1mn-1.5mn (20%), QR1.5mn-QR2.5mn (25%), QR2.5mn-QR5mn (30%) and over QR5mn (35%).
Yesterday’s announcement came a day after HH the Emir Sheikh Hamad bin Khalifa al-Thani said Qatar’s economy would grow 9% this fiscal and 16% in 2010.
Many economic think tanks, including the International Monetary Fund, have forecast that Qatar’s economy would be the fastest growing in the world as the country is witnessing completion of many of the key projects.
“Despite the global financial crisis, Qatar’s outlook is optimistic and is supported by expansion in the exploration and production of LNG and also spending on infrastructure, education and health sectors,” Kamal recently said.
Kamal had in May 2007 said that Qatar would reduce the peak corporate tax to 12% from 35%, addressing the second Qatar Economic Forum.
Qatar, the world’s biggest exporter of liquefied natural gas, has the world’s friendliest tax climate, according to Forbes 2009 Tax Misery and Reform Index, which evaluates policies that attract or repel capital and talent.
Qatar, with a misery score of 12 points as it levies only corporate income tax, is the most tax-friendly on the index.
The country has outlined more than $160bn capital expenditure to develop its oil and non-oil sectors.
There were recent reports that the government would allow 100% foreign ownership in three more sectors – consultative and technical work services, information technology and distribution services – and was also planning to relax investment norms on other key sectors.
Although Qatar has been relatively unscathed by the global financial crisis, the government has stepped in to support the local banking system through direct capital injection, buying up of local investment portfolio as well as real estate credit and investment portfolio.
Badr Ahmed al-Qayed, the director of government auditing at the Ministry of Finance and Economy, said Qatar had been least affected by the global financial crisis.