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Executive Regulations: Further Information Regarding the New Tax Law and Its ER

 

There has been significant information about withholding tax that was changed. It is important that investors be aware and abide to this change to avoid penalties and non-compliance from the General Tax Authorities rules and regulations.

In the previous ER, any services implemented abroad, justified, and supported with documents was not subjected for withholding tax. However, in the new ER, any service that is carried out partially or wholly abroad is subject to the withholding tax if you have an agreement with a Qatari company.

To further interpret, let us take for example the social media and web development. A foreign service provider can grant service even without its presence in Qatar but since the service provider has an agreement with a Qatari company to execute the service, then all amounts related to this agreement will be subject to the withholding tax 5% in which were not subject to the withholding tax in the previous ER. The same applies to any consultancy services such as designing, drawings, legal, accounting, business advisory services etc.

Furthermore, any agreement that includes supply and apply must be split into two agreements to avoid any withholding tax issue.

We wanted to highlight this point because the words used, consumed, and exploited were unclear to all the people. This has been clarified after several meetings with the General Tax Authority.



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