Doing business in Qatar
Thread poster: Helen Shiner

Helen Shiner  Identity Verified
United Kingdom
Local time: 12:21
Member (2008)
German to English
+ ...
Feb 22

I am currently in negotiation with a company in Qatar. Having submitted my quote and other relevant documentation, I have now been advised by their finance department that they are obliged to levy a 5% tax on my invoice.

They tell me that this new law came into force in December 2019 and that all services rendered outside of Qatar are subject to this tax.

I would be grateful to hear from anyone based in the UK - please no speculation from elsewhere - and who trades wit
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I am currently in negotiation with a company in Qatar. Having submitted my quote and other relevant documentation, I have now been advised by their finance department that they are obliged to levy a 5% tax on my invoice.

They tell me that this new law came into force in December 2019 and that all services rendered outside of Qatar are subject to this tax.

I would be grateful to hear from anyone based in the UK - please no speculation from elsewhere - and who trades with Qatar as a freelance translator. Specifically whether you can confirm the existence of this new regulation. Thank you.
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Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Double tax agreement Feb 22

I'm not based in the UK, so I hope I won't be booted out of the forum.

In any case, I don't need to be based in the UK to read a so-called double tax agreement, in this case the agreement between Qatar and the UK, which you'll find at https://assets.publishing.service.gov.uk/government/u
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I'm not based in the UK, so I hope I won't be booted out of the forum.

In any case, I don't need to be based in the UK to read a so-called double tax agreement, in this case the agreement between Qatar and the UK, which you'll find at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/500345/qatar-uk-dta-2010-consol_-_in_force.pdf .

See, no speculation.

Article 7 concerns business profits and states that, 'The profits of an enterprise of a Contracting State shall be taxable
only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.'

The term 'business' is defined in Article 3: 'the term "business" means any profit seeking activity including the performance of professional services and of other activities of an independent character;'

These are the typical provisions for business profits in such bilateral agreements. It's very simple, really: you only pay tax in the country where you are carrying out your business.

In a situation like this, your Qatar-based client should not deduct any local tax, as it would constitute an infringement of this bilateral agreement. Qatar and the UK have mutually agreed to apply the agreed provisions. Such bilateral agreements take precedence over any national law.

You need to explain this to your client. I had a similar situation with a Morocco-based agency. They accepted this and did not deduct anything.

If they still insist on deducting 5%, you should ask them to add 5.26% to the agreed fees, so that the net amount paid will be what you agreed (105.26 x 0.95 = 100). If they insist on paying more tax than they have to, I wouldn't object, but this tax does not concern you.
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Helen Shiner  Identity Verified
United Kingdom
Local time: 12:21
Member (2008)
German to English
+ ...
TOPIC STARTER
@Thomas Feb 22

Thank you. Yes, I am aware of that agreement and have queried it with my potential client on exactly the basis you mention. My question relates to a supplementary regulation I am told came into force in December 2019, as my first post states.

 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
National regulation irrelevant Feb 22

I cannot see any such regulation mentioned at https://www.gov.uk/government/publications/agreement-between-the-uk-and-qatar-for-the-avoidance-of-double-taxation , so it must be a national regulation in Qatar, not a treaty amendment.

As they have to abide by the bilateral agreements they have signed, a national
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I cannot see any such regulation mentioned at https://www.gov.uk/government/publications/agreement-between-the-uk-and-qatar-for-the-avoidance-of-double-taxation , so it must be a national regulation in Qatar, not a treaty amendment.

As they have to abide by the bilateral agreements they have signed, a national regulation or law cannot overrule the UK-Qatar agreement and is thus irrelevant in your case. They can deduct their 5% tax in cases where it does not conflict with any double tax agreement.

Of course, either Qatar or the UK could give notice to terminate the agreement, cf. Article 27, but it does not appear that has been done, so the agreement is in force.
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Helen Shiner  Identity Verified
United Kingdom
Local time: 12:21
Member (2008)
German to English
+ ...
TOPIC STARTER
@Thomas 2 Feb 22

Thank you, Thomas. Yes, I have already argued along precisely those lines.

I am hoping to hear from someone who knows what this regulation might be and can clarify whether it relates to work carried out externally to Qatar or not.


 

Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Found this Feb 22

Deloitte: International Tax – Qatar Highlights 2019:

'Withholding tax:'

'Technical service fees –Technical service (and consultancy, commission, directors’, brokerage and attendance) fees paid under contracts signed on or after 13 December 2018 to a nonresident for services carried out wholly or partly in Qata
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Deloitte: International Tax – Qatar Highlights 2019:

'Withholding tax:'

'Technical service fees –Technical service (and consultancy, commission, directors’, brokerage and attendance) fees paid under contracts signed on or after 13 December 2018 to a nonresident for services carried out wholly or partly in Qatar are subject to a 5% withholding tax.'

Your services in the UK are not carried out wholly or partly in Qatar, so their national regulation does not apply to this case. If you travelled to Qatar and spent time there working on their projects, there could be a tax liability.
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Helen Shiner  Identity Verified
United Kingdom
Local time: 12:21
Member (2008)
German to English
+ ...
TOPIC STARTER
@ Thomas 3 Feb 22

Again, I have already seen that and referred to it. I do tend to be very thorough before asking questions! Thank you for your efforts, however.

I am still interested in hearing from anyone who does trade with Qatar.


 

Helen Shiner  Identity Verified
United Kingdom
Local time: 12:21
Member (2008)
German to English
+ ...
TOPIC STARTER
The regulation Feb 22

I have now been sent the relevant regulation - in Arabic (I don't read Arabic) - so it will take me some time to resolve this.

 

Tom in London
United Kingdom
Local time: 12:21
Member (2008)
Italian to English
More stuff Feb 23

Helen Shiner wrote:

I have now been sent the relevant regulation - in Arabic (I don't read Arabic) - so it will take me some time to resolve this.


Here's more stuff from PWC

http://taxsummaries.pwc.com/ID/Qatar-Corporate-Withholding-taxes


 

Helen Shiner  Identity Verified
United Kingdom
Local time: 12:21
Member (2008)
German to English
+ ...
TOPIC STARTER
@Tom Feb 23

Thank you, Tom. That certainly sets it out clearly.

The directive (cabinet resolution no. 39, 2019 in Arabic) I have been given appears (I am relying on Google Translate, so no definitive pronouncement from me) to say that non-resident service providers are subject to 5% tax on their invoices, but that they can contact the Qatari tax authorities, after the fact, citing the relevant double taxation agreement, with a view to receiving a refund of that 5%. Hmmm.


 

Helen Shiner  Identity Verified
United Kingdom
Local time: 12:21
Member (2008)
German to English
+ ...
TOPIC STARTER
Cabinet Resolution no. 39, 2019 Feb 23

Withholding Tax
Changes to the “wholly or partly” rule while testing performance to assess the applicability of Withholding Tax (WHT). Services that are consumed in Qatar or performed for the benefit of Qatar are viewed as locally sourced, regardless of the place of performance and will be subject to WHT.

htt
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Withholding Tax
Changes to the “wholly or partly” rule while testing performance to assess the applicability of Withholding Tax (WHT). Services that are consumed in Qatar or performed for the benefit of Qatar are viewed as locally sourced, regardless of the place of performance and will be subject to WHT.

https://www2.deloitte.com/om/en/pages/tax/articles/qatar-issues-new-executive-regulations-income-tax-law.html
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