Federal Experts Consultancy

President of the General Tax Authority (GTA) Ahmed bin Issa Al Mohannadi confirmed that the Authority does not intend to impose a tax on income and that the value-added tax is still under legislation.

In an interview with Arabic newspaper Al-Sharq published on Sunday, GTA President said that the tax is one of the most important tools for diversifying the country’s sources of income and from a legal point of view, and in line with the legal principle, the State of Qatar has issued Income Tax Law No. 24 of 2018 and Selective Tax Law No. 25 of 2018 regarding selective tax, undertaken by the Authority, which is the competent authority to implement these laws.

He explained that in general, tax is a sum of money imposed by the government on companies, and it is one of the sources of public revenue, as it is redistributed between sectors and government services provided to individuals to achieve equality and economic stability in the country.

Since the tax aims to diversify the State’s sources of income, the exemptions are considered by the State as a kind of support and development for other economic sectors with the aim of developing them and encouraging investments in them, he added.

He stressed the need for the tax rate to be compatible with the sector’s profitability and competitiveness, as there are other factors of interest to the investor other than tax, such as business costs, production costs, labor and other costs that affect the profitability of the economic sector.

The exemptions granted are reviewed and studied periodically, as the exempted sectors may be able in the future to achieve a feasible economic return, allowing the Authority to impose or increase taxes according to the performance of each economic sector.

Al Mohannadi said that taxes in Qatar are among the lowest tax rates in the world in order to encourage the investment environment. The presence of taxes also enhances the State’s financial solvency and diversifies its sources of income, which enhances its financial position, and creates a safe and attractive investment environment at the same time.

GTA President said that the Authority, since its establishment in 2018, has gradually increased the awareness among the community, as tax culture is a new for Qatar society, and therefore the goal of gradual awareness is to provide an opportunity for society to understand the concept of tax in its correct form.

His Excellency said that in 2021, large numbers of taxpayers have registered with the Authority and submitted their tax returns. He noted that GTA are still running many advertising campaigns to deliver the main messages of the most important provisions of the Income Tax Law and the Selective Tax Law

Regarding the types of taxes currently applied, Al Mohannadi mentioned that there are two types that are already applied within the State of Qatar, namely income tax, which is applied annually on the total income subject to the income of foreign shares in companies and non-company taxpayers, and of course there are exempted categories according to the detail provided in Law No. 24 of 2018 and the purpose of their exclusion is for economic or social reasons, among the most important of these exemptions, for example, but not limited to, is the total income of Qatari persons residing in the country. In addition to the total income of legal persons residing in the country and wholly owned by Qataris, and the total income arising from agricultural or fishing activities, he added.

GTA President also pointed to selective tax, which is applied to excise goods, such as soft drinks 50 percent, energy drinks 100 percent, tobacco of all kinds 100 percent, and goods of a special nature 100 percent. As for the entities that are subject to the excise tax, the import and local production of excise goods are subject to them, and as a consumption tax, the final consumer is the one who bears the burden of the tax.

His Excellency pointed out that, according to what was stated in Law No. 25 of 2018 regarding Selective Tax, diplomatic and consular bodies, international organizations, heads and members of the diplomatic and consular corps accredited to the State are exempted from tax, on the condition of reciprocity, in accordance with the controls issued by a decision of the Minister.

The GTA President confirmed in his interview with Al-Sharq newspaper, that small and medium-sized companies have been taken into account, as there is a special section for them within the Income Tax Department, and the aforementioned law has taken into account the exemption from tax of gross income arising from craft activities that do not use machinery, and whose total income does not exceed QR 200,000 per year, and the average number of workers in the tax year does not exceed three workers, and which are practiced through one establishment.

Regarding the value-added tax, the President said that Qatar has no reservations about this tax, which emerged through a unified Gulf value-added agreement for the Gulf Cooperation Council, and Qatar is part of that agreement, and there is no reservation, but the matter is still under legislation.

Regarding the application of the simplified tax return form, which must be submitted by companies and permanent establishments that are exempt from tax, owned by Qatari citizens and from the GCC countries, His Excellency stressed that the General Tax Authority seeks to reduce the burden on taxpayers, especially those who have small or micro commercial activities, in accordance with the provisions of the law and the executive regulations, and the goal of applying the simplified tax return form is to facilitate the submission procedures, so that the taxpayer has the option of self-presentation without the need for an accredited audit office, so that the taxpayer does not have to pay additional amounts to audit offices.

Regarding the application of the selective tax on a number of unhealthy goods, starting from 2019, His Excellency said that the revenues of the selective tax for the year 2019 amounted to QR 1.20 bn, indicating that the goal of the selective tax is to reduce consumption of harmful goods, which reduces the burden on the health sector in the country, and therefore, a study is currently underway to expand the scope of the selective tax on unhealthy goods.

On the repercussions of the Coronavirus pandemic, His Excellency said that the authority is following the changes resulting from the Covid-19 crisis, and as a result, a package of facilities is provided, including postponing the submission of tax returns for more than one period, as well as exemptions from fines and financial penalties, which mitigate the impact of the pandemic on companies. The impact varies from one economic sector to another, but it was a difficult year for all economic sectors for all countries, however, this impact is short-lived, and several sectors have begun to recover, starting from the last quarter of last year, and the World Bank estimates also indicated an estimated growth rate of 3 percent for the State of Qatar for the year 2021.



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