The model company in Qatar has a total tax rate, or TTR, (as defined under the Doing Business methodology) of 11.3% of commercial profits, making it the lowest tax rate in the world
Qatar continues to be one of the most favourable corporate tax environments in the world according to a report by the World Bank Group and PricewaterhouseCoopers (PwC).
The report ‘Paying Taxes 2016’, now in its 10th year, found that on average, the model company in Qatar has a total tax rate or TTR (as defined under the Doing Business methodology) of 11.3% of commercial profits, making it the lowest tax rate in the world.
In the Middle East, the case study company outlined in the report has an average TTR of 24.2%.
In Qatar, the said company makes 4 tax payments per year and takes an average of 41 hours to comply, while in the Middle East, it was 17 payments and 160 hours, which is below the world average of 261 hours and the lowest across all global regions.
Incorporating data on tax systems in 189 economies round the world, the report found that on average, the model company has a TTR of 40.8% of commercial profits, down by just 0.1 percentage points from last year. It makes 25.6 tax payments per year and takes 261 hours to comply with its tax requirements, a drop of 2 hours compared to last year.
“As far as Qatar is concerned there is an attractive tax regime here for business and individuals with a 10% corporate income tax rate, withholding taxes of 5% or 7%, no personal income taxes and no sales tax or value added tax,” said Neil O’Brien, head of Tax at PwC Qatar.
Economies, including Qatar’s, which have invested in online filing and payment infrastructure, are reaping a digital dividend from these systems, the report said.
Qatar has invested in electronic filing as a way of improving its compliance process and it continues to look at new ways and incentives to attract Qatari entrepreneurs and foreign direct investments as a way of diversifying its economy, he said.
Jeanine Daou, partner and Middle Eastleader for indirect taxes and fiscal policy said, “The report helps inform the discussion around tax reform, a topic that is currently extremely relevant in the GCC (Gulf Cooperation Council).
Governments will now need to make decisions concerning key elements in the system, including simplification of the compliance requirements through notably electronic filing and payment to ensure a smooth implementation.”
“A certain level of harmonisation of the VAT systems across the GCC will be needed notably to avoid cases of double taxation of intra-GCC transactions and simplify compliance requirements for the GCC companies,” she said.
