Part 2: Part 2: General Scheme of Taxation, Residence and the Charge to Tax
Article 6 - Policy Statement on the General Scheme of Taxation
QFC Entitiesare taxed on their Local Source Profits, with only one category of Taxable Profits.
Article 7 - Scope of Regulations
These Regulations provide for the imposition, administration and collection of tax in accordance with Article 17 of the
QFC Lawin relation to QFC Entities.
Article 8 - Residence and Non-Residence(1) A
QFC Entityshall be regarded as Resident in Qatarfor the purposes of these Regulations if—(a) it is incorporated in Qatarunder the Company Regulations 2005, the Limited Liability Partnership Regulations 2005, the Partnership Regulations 2007 or any other regulations made under the QFC Lawor rules made by the Regulatory Authorityor QFC Authority; or(b) its place of effective management is in Qatar.(2) Where a QFC Entityis treated as resident in a territory outside Qatarand not resident in Qatarfor the purposes of any Double Taxation Agreement, such QFC Entityis treated as not Resident in Qatarfor the purposes of these Regulations.(3) A QFC Entity, which is a branch, shall not be regarded as a Resident in Qatarin accordance with Article 8(1)(b) unless the place of effective management of the enterprise of which it is a branch is in Qatar. Amended (as from 18th June 2014)
Article 9 - The Charge to Tax(1) Subject to the provisions of these Regulations, corporation tax shall be charged for each
Accounting Periodat the standard rate on every QFC Entityin respect of the full amount of its Local Source Taxable Profits.(2) The standard rate of corporation tax is 10%.
Article 10 - Local Source(1)
Taxable Profitsare Local Sourceif they arise in or are derived from Qatar.(1A) Notwithstanding any other provisions in these Regulations, profits arising in or derived from Qatarby a QFC Entitythat is not an Authorised Firmfrom the provision of services for use outside Qatarare deemed not to be Local Source Taxable Profitsto the extent that the conditions set out in Rule 1A are met.(2) Without prejudice to the generality of Article 10(1), Local Source Taxable Profitsare deemed to include—(a) Passive Interest Income; and(b) notwithstanding the provisions of Article 13, profits arising from interest income received by or accrued to a Financial Institutionto the extent that—(i) the profits are attributable to the initiation of the underlying loan in Qatarby, or on behalf of, the Financial Institution; and(ii) the risk of default in respect of either (or both) the interest and principal of the loan is borne by the Financial Institutionin Qatar,provided that where either condition (i) or (ii) is met, but not both, 50% of the relevant profits shall be deemed to be Local Source Taxable Profits.(3) Local Source Taxable Profitsshall exclude any profit derived from—(a) immovable property located outside Qatar;(b) Permanent Establishmentsof the QFC Entityoutside Qatar; and(c) notwithstanding Article 10(2)(a), the receipt of Passive Interest Incomewhere the borrower is not Resident in Qatar(and the borrowing is not substantially undertaken by or through a Permanent Establishmentof the borrower in Qatar) or where the borrower is Resident in Qatarand the borrowing is substantially undertaken by or through a Permanent Establishmentof the borrower outside Qatar. Amended (as from 12th June 2017).
Article 11 - Taxable Profits and Chargeable Profits(1) The
Taxable Profitsof a QFC Entityfor an Accounting Periodare the Chargeable Profitsof that QFC Entity, as reduced by the set off of any tax losses and Group Reliefunder the provisions of Part 5.(2) The Chargeable Profitsof a QFC Entityfor an Accounting Periodare the Accounting Profits, as defined in Article 15, of that QFC Entityfrom its Licensed Activityand as adjusted by the provisions of these Regulations, excluding Part 5. Amended (as from 18th June 2014)
Article 12 - Currency of Tax Calculation(1) The
Chargeable Profitsof a QFC Entityshall be calculated in the currency of its accounts.(2) Where the currency of the accounts of a QFC Entityis not Qatari Riyals the Chargeable Profitsshall, subject to Article 12(3), be converted into Qatari Riyals at the closing exchange rate applying on the last day of the Accounting Periodin which the Chargeable Profitsarose.(3) A QFC Entitymay elect to use, for the purposes of converting Chargeable Profitsinto Qatari Riyals, the average exchange rate applying for the Accounting Periodin which the Chargeable Profitsbeing converted arose.(4) An election under Article 12(3) shall be made in writing to the Tax Departmentwithin 6 months of the end of the Accounting Periodto which it is to first apply and, once made, shall apply to all subsequent Accounting Periods.(5) This Article applies to the calculation of tax losses in the same way as it applies to the calculation of Chargeable Profits.
Article 13 - Non Residents(1) The
Chargeable Profitsof a QFC Entitynot Resident in Qatarshall be the amount of Chargeable Profitsas are attributable to its Permanent Establishmentin Qatar.(2) The Chargeable Profitsattributable under Article 13(1) to a Permanent Establishmentshall be the same as the Chargeable Profitsit would have made if it were a distinct and separate entity, engaged in the same or similar activities under the same or similar conditions, dealing wholly independently with the enterprise of which it is a Permanent Establishment.(3) In attributing Chargeable Profitsto a Permanent Establishmentunder Article 13(2) the Permanent Establishmentshall be assumed to have the same credit rating as the enterprise of which it is a Permanent Establishment.(4) In attributing Chargeable Profitsto a Permanent Establishmentunder Article 13(2) there shall be attributed to the Permanent Establishmentsuch equity and loan capital as appears to the Tax Departmentto be just and reasonable.(5) In attributing Chargeable Profitsto a Permanent Establishmentunder Article 13(2), a deduction shall be available to the Permanent Establishmentin respect of interest incurred by the enterprise of which it is a Permanent Establishmenton indebtedness utilised by the Permanent Establishmentin carrying out its activities. If only part of the indebtedness is utilised by the Permanent Establishmentin carrying out its activities, a proportion of interest as appears to the Tax Departmentto be just and reasonable shall be available for deduction. Amended (as from 18th June 2014)