Change in Ownership

Normal procedure for change in ownership of shares

Step 1: The Seller and the Buyer should agree on the sale price and draft the Sale and Purchase Agreement (SPA) in a judicial/legal format. There is a standard format available with the Ministry of Justice (MoJ) and, your lawyer may help on this matter. Sale and Purchase Agreement may be complemented by any additional terms of sale so long such documents are also registered with the MoJ.

 Step 2: After signing the SPA by the Buyer and the Seller (before registering with the MoJ), The Seller should initiate the process of filing the Capital Gain Tax Return (CGTR) for selling the shares in an unlisted entity (securities). Normally the sale of shares by a natural person, who is tax-resident in Qatar, is taxed at rate of Zero % (this has been clarified by General Tax Authority in case of Non-Qatari Citizen residing in Qatar they may be still subject to 10% Capital Gain, however Qatari Citizens are normally taxed at Nil rate in all tax scenarios). On filing Capital Gain Tax Return, there is a unique CGTR reference number is generated by Dhareeba System which is critical to complete the Step 3. Capital Gain Return should be filed with in 30 days of completing the Step 1 (signing of the SPA) otherwise, could result in a tax penalty of QR 500 per day of delay (up to QR 180,000). Further, the sale price for the purpose of computation of the capital gain is the higher of (i) Contracted Sale price and (ii) Fair value of shares.

 Step 3: After filing the Capital Gain Return, the Company (neither the buyer nor the seller) should initiate the NOC process for change in ownership. This should be performed in the Dhareeba system and requires electronic approval of the Buyer and the Seller using National Authentical System (NAS). We request the Buyer (non-resident body corporate) to create the profile in the NAS system before initiating the NOC process in the Dhareeba system. Normally, subject to submission of any additional information requested by GTA, the NOC will be approved within 30 days. NOC will not be given to the Company having pending tax filing obligations or significant amount of tax dues, based on our experience.

 Step 4: After taking the approval from GTA, within 30 days, the Company should submit the SPA along with other required documents to the MoJ. Other required documents include the No objection/dues certificate from the Ministry of Administrative Development, Labour and Social Affairs and the Revised Articles of Association in Draft.  

 Step 5: On completion of registration of documents with the MoJ, the online application for the change in ownership could be filed with Ministry of Commerce and Industry for amending the Commercial Registration and notifying the revised the Articles of Association. MoCI, after reviewing the application and NOCs and on payment of the required fee, will amend the Commercial Registration and issue the revised commercial registration certificate showing the revised ownership. The revised Articles of Association will be also stamped by the MoCI.

 As a planning process, the Company and the Shareholders should ensure the availability of following information/details.

 1.       Active NAS profile for the Buyer, the Seller and the Company are compulsory. Kindly follow the link for more information https://hukoomi.gov.qa/en/service/request-to-register-in-national-authentication-system-nas-through-general-tax-authority . Avoid creating double accounts.

2.       In order to ensure Limited Liability Company Status, the Company should have minimum 2 shareholders. Otherwise, the Company will be classified as Limited Liability Company with Single Owner.

3.       Last 3 years audited financial statements may be requested by MoCI

4.       In case of non-filing of tax return for any closed Tax year, the NOC process may not be initiated in the Dhareeba system. E.g. On 1 Jan 2022, the Taxpayer cannot initiate the NOC for change in ownership unless the tax return for the yearend December 31, 2021 is already complete.

5.       In case of significant tax amount under dispute, the NOC may be obtained by providing a guarantee by the Seller – However, this is purely at the discretion of the GTA’s assessing officer.

6.       In case of any salary dues payable under Wage Protection System, the MoJ may not approve the SPA. Hence, all salary dues for the last 3 months should have been paid regularly.

7.       Certain licensed activities may be restricted and need further review and approval by MoCI, the amendment should not result in deviation from FDI norms. Hence, amending Commercial Registration may require additional time due to restricted activities appearing in the trade license of the Company.

 We seek your attention to the fact that the officers at the MoJ, GTA, Labour Ministry and MoCI, by Qatari Laws,  are given with powers to seek additional documents or clearances that are not listed above. Hence, the Steps and documents mentioned above are not exhaustive in nature, but inclusive.

 We welcome your queries and feel free to reach out to us.