Qatar has large amounts of surplus capital, but foreign direct investment (FDI) can “still play a critical role” in building up a knowledge economy and fostering an environment driven by technology and technical expertise, PwC has said in a report.
Qatar’s various free zones have recently rolled out incentive programmes precisely to encourage leading firms to establish subsidiaries in Qatar. The Qatar Investment Promotion Agency was established in 2019 to enhance the promotion of Qatar’s offerings, PwC said in its latest "Qatar Economy Watch".
In June, United Nations Conference on Trade and Development (UNCTAD) had reported that Qatar's FDI inward stock exceeded $31bn in 2019.
In its "World Investment Report 2020" UNCTAD had highlighted Qatar’s “creation of an investment promotion agency to attract foreign investment.”
According to PwC, Qatar’s core economic policies, including macroeconomic stability and a pegged currency, are broadly supportive of business development, as is the low level of business taxation (zero for local firms and 10% for foreign companies).
The government is making concerted efforts to improve the business environment in many areas. The World Bank’s latest "Ease of Doing Business" report noted reforms in three of its ten pillars – getting credit, registering property and getting electricity – the most on record.
These reforms benefit companies in many sectors, but there are also specific policies focused on a knowledge-based economy. In December 2019, the Qatar Central Bank’s governor said that a strategy to support financial technology (fintech) development is due to be released shortly, with regulatory standards designed to support innovation.
The QCB, in fact, recently launched its regulatory "sandbox", also inviting firms interested in safely live-trialing their services in the digital payment services space.
The Qatar Financial Centre has already made fintech one of its focus areas. There have also been recent developments in Qatari tax legislation that will also shape Qatar’s transition towards a knowledge-based economy, PwC noted.
In December 2019, Qatar published the Executive Regulations to the Income Tax Law No 24 of 2018 in the official Gazette.
“These new regulations have not only provided clarifications on the applications of the New Tax Law in some areas but have also specified new transfer pricing requirements,” PwC said.
For example, it said, the scope of with-holding tax is expected to be much wider in the future and will bring many contracts and transactions previously outside the with-holding tax scope, within it. Taxpayers will need to review, which contracts and transactions could be caught under the new regulations and also assess the commercial and financial impact of these changes.
The Ministry of Commerce and Industry (MoCI) operates a Single Window, a one-stop-shop for business registration and licensing and one of the first globally. It consolidates hundreds of government services into 31 end-to-end integrated electronic services. Local and international investors are able to register and licence their businesses with one smart application, enhancing efficiency and conserving resources.
In January this year, HE the Minister of Commerce and Industry Ali bin Ahmed al-Kuwari announced that further reforms are being considered, including cancelling registration fees for founding companies.
“The recent passage of a Public Private Partnership (PPP) Law will further enhance efforts to attract foreign direct investment (FDI), along with the knowledge and technology that come with it. In 2019, we saw a new law come into effect which introduced significant changes to Qatar’s foreign investment regulations. For the first time, this allowed up to 100% foreign ownership in Qatar, further encouraging foreign direct investment for the country,” PwC noted.
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