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New Income Tax Law Overview

Learn about key features of the 2009 Income Tax Law in Qatar, including exemptions, tax calculation, withholding rates, and taxpayer obligations.

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New Income Tax Law Overview

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  1. Ministry of Economy and FinancePublic Revenues and Taxes Department Main features of the new Income Tax Law December 2009

  2. Introduction • Law No. 21 of 2009 issuing the Income Tax Law (ITL) was issued on 17/11/2009 • Entry into force of the ITL: The ITL will apply on income arising on or after 01/01/2010 (to be declared during 2011). • Some provisions will apply, however, as of 01/01/2010

  3. Scope Territorial scope • Income from sources in Qatar • Certain bank interest and returns realized outside Qatar • Commissions accrued outside Qatar in respect of activities carried on in Qatar

  4. Scope (cont.) Income from sources in Qatar • Income from an activity carried on in Qatar • Income from contracts wholly or partly carried on in Qatar • Income from property situated in Qatar • Consideration for services paid to head offices, branches or related companies • Interest on loans derived from Qatar

  5. Exemptions • Certain bank interest and returns • Interest of public treasury bonds, development bonds and public corporation bonds • Interest paid to individuals not carrying on a taxable activity • Dividends • Capital gains on real estate and securities (subject to conditions) • Handcraft activities (subject to conditions) • Income from agriculture and fishery • Income of Qataris and companies wholly owned by Qataris who are residents in Qatar.

  6. Calculation of tax • Accounting rules: accounting period, accounting and taxation • Tax base • Taxable income: Gross income – deductions • General conditions of deduction • Examples of allowable deductions, including (realized) bad debts and provisions • Prohibited deductions • Losses • Tax rates • Standard rate: 10% • Special rates: rates of agreements or 35% • Withholding tax rates: 5% or 7%

  7. Calculation of tax (cont.) • Withholding tax (WHT) • What is subject to WHT? amounts paid to non residents and not related to a permanent establishment (PE) • At which rate? • 5% on royalties and technical fees • 7% on interest on loans, commissions, brokerage fees, director’s fees, attendance fees and other payments for services performed wholly or partly in Qatar

  8. Calculation of tax (cont.) • How the WHT is carried out? • Retention of the WHT amount • Delivery of a WHT certificate to the recipient stating the gross amount paid and the WHT amount • Payment of the WHT to the tax department within 15 days from the end of the month of payment • In case of non compliance: The payer of the amounts shall pay the WHT + a penalty equal to the amount of WHT

  9. Calculation of tax (cont.) • Impact of Double Taxation Agreements (DTAs) on WHT • Application of treaty rates only upon presentation of a tax residence certificate from the competent authority of the State of residence • Treaty rates better (less) than rates provided for in the law: treaty rates apply • Treaty rates higher than rates provided for in the law: law rates apply

  10. Calculation of tax (cont.) • Effective date of the WHT • 01/01/2010 • Application of the penalty: The Director has the authority to reduce its amount of up to QAR 50,000

  11. Taxpayer’s obligations • Information of the Department of the beginning and the end of the activities • Filing tax returns • Bookkeeping requirements • Withholding tax • Disclosure of information • Spontaneous • Upon request

  12. Powers and duties of the Tax Department • Access to the taxpayer’s premises and data • Assessment of the tax • Powers of the Department during the assessment • Cases of presumptive assessment • Assessment decision • Re-assessment • Application of the assessment procedure against the liquidator • Secrecy requirements • Case of information protected by bank secrecy

  13. Powers and duties of the Tax Department (cont.) • Collection • Payment upon filing of the return and at the end of the objection phase • Settlement of the tax liability upon the rendering of a final court decision • Seizure procedures (provisional and executive) • Refund • Possibility of appeal against the decision of the Department re a refund claim • Possibility of compensation of the taxpayer in case of delay in making the refund

  14. Objections and appeals • Objection • Period of objection: 30 days • Consequences: suspension of the execution of the assessment decision • Appeals • Before the Tax Appeal Committee • Before the competent court(s)

  15. Offences and penalties • Administrative penalties • Late filing and late payment of the tax • Failure to comply with certain obligations • Penalties for tax crimes • Against the taxpayer and whoever motivates or assists him to commit a crime • Against Department’s employees

  16. General provisions • Anti-avoidance • Definition • Prerogatives of the Department • Statute of limitation periods • Case where a return is filed • Case where a return is not filed • Case where the taxpayer is not registered • Statute of limitation re collection • Causes of interruption • Income and entities not taxable

  17. Conclusion: What’s new? • Registration and tax cards • Withholding tax • Some rules re determination of taxable income • Tax rates • Penalties • Anti-avoidance

  18. THANK YOU!

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