All incorporated entities and permanent establishment in Qatar are expected to withhold taxes
All incorporated entities and permanent establishment in Qatar are expected to withhold taxes on certain payments and file returns. Timely remittance of withholding taxes to the bank accounts of government is also essential. Notably, there is a separate bank established by the Qatar Tax Department (QTD) to collect withholding taxes and more updated details available on the QTD’s website.
Applicability: Qatar Tax Laws stipulates the requirement to withhold taxes in payment to Non-resident not having Permanent establishment in Qatar. As a rule of thumb, management should consider that any person failing to produce valid tax card issued by QTD as Non-resident having no permanent establishment, unless legally proved otherwise. Failure to withhold taxes or withhold only a lower amount than is stipulated, the entity is subject to 100% of taxes not properly withheld as penalty plus the actual amount of withholding taxes (Article 41).
Any Qatar tax resident company that makes a payment, subject to WHT, to its foreign supplier (non-resident) is required to withhold the WHT amount and remit it to the tax department accompanied by a WHT Return by the 16th day of the following month.
WHT rate: Upto 18 December 2018, Interest -commission – brokerage fee – Director’s fee (including sitting fee) 7%, Royalties 5%, Management services fee & Technical fee 5% - if the service is wholly or partly performed in Qatar. On or after 18 December 2018, there is a unified rate of 5% applied on all services partially or wholly performed in the State of Qatar.
Transitional provision: Rate of WHT: Unified rate of 5% should be applied on all contracts concluded on or after 13 December 2018. For the contracts concluded before 13 December 2018, if the payments were due before 13 December 2018, the old WHT rate should be applied. If the payment were due on or after 13 December 2018, the WHT should be based on new law (unified rate of 5%). Dividend is not subject to withholding taxes.
QFC registered entities are not liable to withhold taxes as applicable QFC tax laws.