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The tax law introduced a requirement for all entitiesregistered in Qatar or with a permanent establishment inQatar to withhold a percentage of certain payments madeto non-residents. This means that although the withholdingtax liability falls on the non-resident with activities in Qatarwithout a permanent establishment, the withholding taxcompliance requirement is borne by the Qatar entity.The applicable withholding tax rates are as follows:• 5% of the gross amount of royalties and technical fees;and• 7% of the gross amount of interest (some exclusionsapply), commissions, brokerage fees, director’s fees,attendance fees, and any other payments for servicescarried out wholly or partly in the state.• There is no withholding tax on dividends.A company that makes the payment to its foreign supplier isrequired to withhold the tax and remit to the tax departmentthe funds that were withheld by the 16th day of the followingmonth. In the event that the company does not make apayment to the tax department, the company will be liable fora penalty equal to the amount of unpaid tax due, in additionto the withholding tax.Circular No. 3/2011 confirmed that the requirement towithhold applies to all entities registered in the state ofQatar including government bodies, public authorities andcorporations. The circular also includes an instruction forsuch entities to refrain from including conditions relating toexemption from income tax or the bearing of its burden bythem (e.g. gross-up clauses) unless written approval fromthe Ministry of Economy and Finance is obtained. Entitiesregistered in the QFC do not have to withhold.Qatar has a growing network with almost 60 treaties in forceat the time of writing which may allow a foreign company toreclaim withholding tax it has suffered. The treaty network isone of the most extensive in the GCC.
