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Doing Business in Qatar ( QNB 2009 Report )

Foreign Investment

1. Free of Transfer
2. Foreign Participation
3. Investment Incentives
4. Foreign Investment Finance
5. Foreign Trade
6. Registration of Patents, Trademarks and Intellectual Property Rights
7. Foreign Investment Law
8. Labour Law
9. Property Law for Non-Qatari’s


Qatar welcomes foreign participation in joint ventures through technology supply, market administration and equity participation. Government initiatives to attract the flow of Foreign Capital into the State can be attributed to various investment incentives provided. The State’s commitment in this direction was further witnessed through the passing of the Foreign Investment Law by an Emiri decree in mid-October 2000, the setting up of the “Investment Promotion Department” at the Ministry of Economy and Commerce, the law establishing the Qatar Science and Technology Park, the law establishing the Qatar Financial Centre, and the new Commercial Law in 2006.

1. Free of Transfer
A share holding company (joint stock) is required to transfer a sum equal to 10% of its profits for the year to a legal reserve until the reserve amounts to at least 50% of the paid-up share capital. This legal requirement represents the only restriction on a foreign participating joint stock company intending to remit all its annual profits generated in Qatar back to the holding company’s base of operations.

Equity capital, loan capital, and all income streams arising in Qatar are freely remittable. No foreign exchange restrictions exist.

2. Foreign Participation

Agency Relationship
Foreigners, whether individuals or corporations, are not permitted to import goods and services on their own account into Qatar; they must sell their goods to a Qatari agent or distributor which will then market them locally. Any personnel seconded by the foreign business must be employees of the Qatari agent in whose name all bids and contracts must be signed. A new Commercial Agents Law No.(8) was enacted in 2002, repealing the earlier Law No.(4) of 1986. The main highlights of the new law is as follows:

  • Merchants registered in the imports register are allowed to import goods covered under agency agreements, subject to approval by the Minister of Economy and Commerce;
  • The Commercial Agent shall be entitled to a commission determined by the Ministry of Economy and Commerce, which shall not exceed 5% of the value of goods imported for trading;
  • The Commercial Affairs Department at the Ministry of Economy and Commerce shall maintain a register to register Commercial Agents;
  • Agencies are confined to Qatari individuals or to companies owned exclusively by Qataris.
  • The Agency agreement can be for a limited or unlimited term. In the case of a limited term agreement, the Agency shall expire upon the expiry of the defined term, unless both parties agree to the renewal. In the case of an unlimited term Agency agreement, unless both parties agree to the termination, a termination may be brought about only by an authority commissioned to settle such disputes;
  • Commercial Agents and their Principals are obliged to provide spare parts and the necessary workshop facilities to consumers for the products covered by the Agency.
  • The courts of the State of Qatar shall be competent to deal with disputes arising between the Agent and the Principal with reference to the Agency contract, unless there is an agreement to the contrary.

Off-Shore Banking Units and Insurance
There are specific restrictions of foreign investment in banks and insurance companies which are contained in the laws regulating these sectors. Law No.19 of 1997 allowed the establishment of Offshore Banking Units (OBUs) in Qatar. Capital requirements of OBUs are set at QR 20 million for Qatari banks and QR 10 million for foreign banks. OBUs are not permitted to accept deposits and provide asset
management for citizens and residents of Qatar unless specifically approved by Qatar Central Bank.

GCC Banks Branches
The Governors of GCC Central Banks agreed at their 25th meeting in Riyadh in October 1997 to allow GCC national banks to open branches in other GCC member states provided the following main conditions are met:
  • share Capital of at least $100 million;
  • the bank should have been conducting business for at least 10 years;
  • the bank is subject to the host state capital adequacy requirements;
  • the bank is subject to inspection and supervision by the host state central bank in accordance with national guidelines and regulations. Provisioning requirements are also set by the central bank of the host state.


3. Investment Incentives
Qatar welcomes foreign participation in joint ventures through technology supply, market administration and equity participation. The Government offers several attractive incentives for joint ventures, such as:
  • Natural gas priced at a nominal and subsidised rate;
  • Electricity at a very nominal rate;
  • A developed infrastructure;
  • Industrial land at a nominal rent starting at one Qatari Riyal (US$1 = QR 3.64) per square meter per year; (Note : Land rent can differ from the area and also from the public and private sectors).
  • No custom duties on imports of machinery, equipment and spare parts;
  • No export duties;
  • No taxes on corporate profits for pre-determined periods

In addition to the above, the Government also offers the following incentives:
  • 5-year renewable tax holidays (Based on Government approval)
  • No income tax on salaries of expatriates;
  • No exchange control regulations - the Qatari Riyal is freely convertible at a parity of $1=Qatari Riyals 3.64, a rate of exchange which has been stable for two decades;
  • Excellent medical and educational facilities;
  • Easy access to world markets with first class air and sea connections;
  • Excellent telecommunications facilities;
  • Liberal immigration and employment rules to enable import of skilled and unskilled labour

Economic liberalisation measures have been introduced to encourage inward investment. The private sector has been given a greater role to play in the development drive. In the pursuit of developing a strong private sector with an enhanced industrial base, the Qatar Development Bank (QDB) was established in 1997, with an authorised capital of QR 200 million ($54.9 million). QDB is 100% owned by the State of Qatar and provides loans at competitive rates of interest.

Generous incentives have also been granted to private investors and measures were taken to encourage grass-roots projects and joint-venture investments. Non-Qatari capital is welcomed in business and industrial investments in the country. Economic reform decrees have been issued to activate industrial investment activities and to accelerate further the current rapid pace of development. Amongst these were proposals for liberalising the present restrictions upon foreign ownership of Qatari enterprises and plans for the re-codification of the principal commercial law statutes in order to meet the requirements of the next century.

The Foreign Investment Law was approved in October 2000. The law allows foreigners to own up to 100% share in certain projects.


4. Foreign Investment Finance
There are no restrictions on foreign investors using their own funds to participate in Qatari businesses. If a foreign investor’s own funds are insufficient to finance the business, the investor may approach a Qatari, GCC, or indeed any bank for finance. Bank financing in Qatar is granted on normal commercial terms.


5. Foreign Trade

Foreign Trade in Qatar is regulated by the Qatar Customs Law No. 5 of 1988. In general, a person wishing to import goods into Qatar for sale, must be registered in the Importers Register and be approved by Qatar Chamber of Commerce and Industry (QCCI). The standard rate of customs duty in Qatar is 5% (ad valorem) in accordance with the GCC customs union put in place since January 2003. Most goods have a general customs duty of 5% as shown below, and others are as following:

General Items .......................................5%
Cement ...............................................(Currently Exempt)
Steel (10 mm & above) ..........................20%
Tobacco ..............................................100%

Goods manufactured in GCC countries are exempt from customs duty provided they are accompanied by a certificate of origin issued by the Chamber of Commerce in the GCC state of origin.

Customs Exemptions
Exemptions from customs duty apply to the following items:
  • Personal effects and used household appliances and furniture belonging to foreign employees arriving in Qatar for the purpose of residence;
  • Equipment, materials and other supplies belonging to Government entities or state companies;
  • Food products such as grains, livestock, tea, coffee, sugar, rice, milk for infants and other essential consumer items;
  • Goods imported by embassies, legations and consulates.

The following documents are required for releasing imports:

  • Invoice and shipping document;
  • certificate of origin;
  • Producer’s declaration of observance of the Israeli boycott rules;
  • Full description of goods;
  • Health and quality certificate, if applicable.

Valuation
The basic value of the assessment of duty is the CIF value of the goods. Where only the FOB price can be established, duty is computed based upon the FOB price plus 15%.

Temporary Imports
The Qatar customs authorities allow certain goods, including equipment, to be imported on a temporary basis. Temporary imports are subject to the prior approval of the Director General of Customs. This approval is normally valid for a period of 6 months, but may be extended by a further 6 months. A longer “temporary import” period may be granted in exceptional cases at the option of the customs authorities. A cheque or bank guarantee equivalent to the duty on a normal import must be deposited with customs to secure this temporary import arrangement.

Duty Exemptions
As a general rule, duty exemptions will not normally be granted. However, it is stated Government policy to allow customs duty exemptions for Qatari joint venture entities, where there is a substantial investment from the foreign joint venture party. In recent years, blanket duty exemption for construction materials and equipment imports have been granted to the principal contractors working on projects undertaken in the oil, gas, water and electricity sectors.

Free Zones
The Qatar Science and Technology Park (QSTP), which is part of the ‘Education City’, has been granted free trade zone status and another industrial city is being developed, which will also be granted free trade zone status.

Personal Effects and Restrictions
Once a foreign employee is resident in Qatar, personal effects may be imported free of customs duty. The import and sale of alcohol and pork products are prohibited. The import of pets are allowed. A valid health certificate issued by a Veterinarian registered with the Public Health Authorities in the country of departure must be produced for pets imported into Qatar. There is no known rabies in Qatar, but animals being imported must be immunised against this disease.

Exports
No duties are levied on exports. It is forbidden to export goods to Israel or to export certain goods such as subsidised foodstuffs or antiques.

6. Registration of Patents, Trademarks and Intellectual Property Rights
Patents are protected by a system of registration for an initial period of 10 years; thereafter they may be registered for a further 5 years only. It is possible for patents to be licensed. Trademarks may be registered for 10 years and renewed indefinitely for further 10 year periods. If a trademark has not been used for a 5 year period, an interested party can apply to the courts to have it cancelled. Registration gives an owner the exclusive right to use a trademark on the goods for which the trademark is registered. The owner may prevent other parties from using the trademark on competing products.

The Copyright Law No. (7) was enacted in 2002, repealing the earlier Law No. (25) of 1995. Under the law, protection is granted to original literary and artistic works, irrespective of the value, quality, purpose or mode of expression of these works. The protection shall cover mainly the following works:

  • Books, pamphlets and other writings.
  • Works delivered orally such as lectures, addresses, sermons, or similar works such as poems and hymns.
  • Dramatic and dramatico musical works.
  • Musical works, whether or not they include accompanying words.
  • Choreographic works and pantomimes.
  • Audiovisual works.
  • Photographic and similar works.
  • Works of applied art, whether handicraft or produced on an industrial scale.
  • Works of drawing and painting, architecture, sculpture, decorated arts, engravings, sketches, designs and three-dimensional geographic or topographic works.
  • Computer programs.

Protection shall also extend to the title of the work if it is original.

The law includes penalties for violation including fines ranging from QR 30,000 to QR 100,000 and a term of imprisonment ranging from six months to one year. The law is enforced by a Copyright Bureau consisting of 12 inspectors.

7. Foreign Investment Law
Qatari Law No. (13) for the year 2000 for the Regulation of Foreign Capital Investment in Economic Activity.

The following is an English translation of the official Arabic text of the new Qatari legislation regarding foreign investment as prepared by Al-Kaabi Lawyers and Legal Consultants in Doha.

We Jassim Bin Hamad Al Thani, Deputy Emir of the State of Qatar
Having perused the temporary amended constitution, particularly Articles (22), (23), (34) and (51)
thereof,
And the Commercial Companies Law No. (11) for the year 1981 as amended by Law No. (9) for the year
1998
And Customs Law No. (5) for the year 1988 and the laws amending it.
And Law No. (25) for the year 1990 regulating non-Qatari capital investment in economic activity, as
amended by Law No. (9) for the year 1995.
And Law No. (11) for the year 1993 concerning income tax.
And Law No. (22) for the year 1993 regulating the Ministry of Finance, Economy and Commerce and
defining its powers.
And upon the proposal of the Minister of Finance, Economy and Commerce.
And the draft law submitted by the Council of Ministers.
And having consulted the Advisory Council.
Have promulgated the following law:

Definitions

Article 1
In the implementation of the provisions of this law, the following words and phrases shall have the meanings shown against each of them, unless the text indicates otherwise:
The Ministry :.................................. Ministry of Finance, Economy and Commerce

The Minister :.................................. Minister of Finance, Economy and Commerce

Foreign Investor :............................. Non-Qatari persons, whether natural or juristic, who invest their monies in any of the projects in which direct investment is permitted by the government in accordance with provisions of this law.

Invested Foreign Capital :..................What is being invested by foreign investors in cash or inkind, monies or rights having financial value in the State of Qatar, including:
1. Cash remitted into the country through banks and licensed financial companies;
2. Assets in kind imported for the purpose of investment in accordance with the provisions of this law;
3. Profits, revenues and reserves emanating from investing the foreign capital in the project, whereby the capital of that project has been increased, or if invested in any of the projects permitted by the provisions of this law;
4. Intangible rights such as licenses, patents and trademarks registered in the State;

Foreign Investment :........................ Foreign capital invested in any of the activities permitted in accordance with the provisions of this law;


The Investment of Foreign Capital

Article 2
1. Subject to Clause (3) of this Article, foreign investors may invest in all sectors of national economy provided they have one or more Qatari partners whose share shall not be less than 51% of the capital, and the company is incorporated in a correct manner in accordance with the rules of law.
2. It is however permissible, by a decision from the Minister, for foreign investors, to exceed the percentage of their participation from 49% to 100% of the project’s capital in the sectors of agriculture, industry, health, education, tourism and the development and exploitation of natural resources or energy or mining, provided it is in conformity with the development plan in the state. Preference to projects that achieve the optimum exploitation of locally available raw materials, export industries or those providing a new product or using modern technology, in addition to projects that assist in residing internationally famous industries and projects that give attention to national manpower and its rehabilitation.
3. It is prohibited for the foreign investments referred to in the two previous Clauses to invest in the fields of Banking, Insurance Companies, Commercial Agencies and the purchase of real estate.

Article 3
The Minister may, after consulting the relevant authority, authorise foreign companies which are engaged in contracts in the state, to perform such contracts if they facilitate the performance of a public service or utility.

Article 4
Where no specific provision is provided for this law, the provisions of the laws prevailing in the state must be followed with regard to the foreign investor obtaining the necessary licenses to engage in any of the activities in which he is authorised to invest.


Investment Incentives

Article 5
Necessary land must be alloted to any foreign investor establishing his investment project, through long term lease for a period not exceeding (50) years, renewable.

Article 6
Foreign investor may import for his investment project, what ever is required for the establishment operation and expansion of the project, in accordance with the laws prevailing in the state.

Article 7
The Ministry may:
1. E xempt the foreign capital invested in the fields provided for in Article (2) of this law from income tax for a period not exceeding ten years from the date of operation of the investment project.
2. Grant foreign investment projects customs duties exemptions with regard to imported machinery and equipment necessary for its establishment.
3. Grant foreign investment projects in the field of industry, custom duties exemption with regard to primary or semi-manufactured materials necessary for production not available in local market.

Article 8
1. F oreign investment shall not be subject, whether directly or indirectly, to expropriation or any other action with similar effect, unless it is for public benefit and done on a non-discriminating basis against quick and adequate compensation in accordance with legal procedures and the general principles provided for in Clause (2) of this Article.

2. C ompensation shall be equivalent to the real economic value of the investment that has been expropriated at the time of expropriation or at time of the announcement relating thereto, and it shall be determined in accordance with normal economic situation prior to any threat of expropriation, and the due compensation must be paid without delay, and shall be freely transferable. The compensation aforesaid will carry interest at the prevailing rate in the state until the date of payment.

Article 9
1. F oreign investors have the freedom to transfer investments to and from abroad without delay, such transfers include:
I - Investment returns;
II - The proceeds of sale or liquidation of all or part of the investment;
III - The proceeds of monies resulting from settling investment disputes;
IV - The compensation provided for in Article (8) of this law.
2. Transfer of funds into any convertible currency shall be at the exchange rate prevailing on the date oftransfer.

Article 10
A foreign investor has the right to transfer his investment to another foreign investor or to a Qatari citizen, or to relinquish the same to his Qatari partner in the case of partnership, provided it is carried out in accordance with the prevailing laws and regulations. In aforesaid cases, the investment shall continue to be treated in accordance with this law, provided thenew investor continues to work in the project, and who shall replace the previous investor in rights and obligations.

General Provisions
Article 11
Any dispute arising between the foreign investor and others may be settled through an international or local arbitral panel.

Article 12
The provisions of this law shall not apply to:
1. C ompanies and individuals to whom the state entrusts the task of extraction, exploitation or management of natural resources by virtue of a concession or special agreement, to the extent which does not contradict what is provided for in the concession contract or any special agreement.
2. C ompanies incorporated by the government or in which the government and other public corporations or departments participate in association with foreign investors in accordance with Article (9) of the commercial companies law referred to above.

Article 13
The foreign investor must protect the environment from pollution, and must abide by the laws, regulations and directives relating to public security and safety, and must refrain from any act which might infringe the state’s public order and public morals.

Article 14
The provisions of this law shall not prejudice the benefits and tax exemptions and any other guarantees and incentives awarded to the companies and firms existing at the time when it shall come into force. Such companies and firms shall continue to retain those benefits, exemptions, guarantees and incentives in accordance with the legislation, agreements and contracts they are derived from.


Penalties and Final Provisions
Article 15
The Ministry shall notify the foreign investor if he contravenes any provision of this law requiring him to rectify such violation within a period not exceeding three months from the date of notification.

Article 16
Without prejudice to any more severe penalty stipulated in any other laws, any foreigner who practices an economic activity contrary to the provisions of this law shall be punished by a fine of not less than fifty thousand Riyals and not exceeding one hundred thousand Riyals. Additionally, any citizen who participates with a foreigner in such activity shall be subject to the same punishment.

Article 17
The technical staff of the Ministry delegated by the Minister shall have the capacity of legal seizure officers, to investigate and identify crimes committed in contravention of the provisions of this law and the implementing decisions thereof. They have, in this respect, the right to access premises and firms subject to this law and to inspect and examine their documents and records.

Article 18
Law No. (25) for the year 1990 referred to above shall be repealed.

Article 19
The Minister will issue bills and decisions necessary to execute the provisions of this law, including determining the fees.

Article 20
All parties concerned, each in its own competence, shall execute this law, and it will come into force from the date of its publication in the official Gazette.

Jassim Bin Hamad Al Thani
Deputy Emir of the State of Qatar
Issued at Diwan Amiri
On: 19.07.1421
Corresponding to: 16.10.2000


8. Labour Law
A New Labour Law No. (14) was issued in May 2004, replacing the earlier Law No. (3) of 1962. The new comprehensive law provides for the protection of the rights of workers, both national and expatriate, and gives Qatari individuals the right to form workers’ associations. The law grants equal rights to men and women on matters of wages, training and promotion, and protects the rights of working women. The new law also stipulates working hours, holidays, leave, workplace safety norms, payments and end-ofservice benefits. The new law states that employment contracts should be written and authenticated by the Labour Department and issued in triplicate.
The following Chapters form the New Labour Law No. (14) of 2004 :
• Chapter I: Definitions and General Rules
• Chapter II: Vocation Training
• Chapter III: Employment of Workers
• Chapter IV: Individual Relations (Contracts)
• Chapter V: Authority of Employers
• Chapter VI: Payments (Salary, Leave Pay and End-of-Service Benefits)
• Chapter VII: Work Hours and Leave
• Chapter VIII: Employment of Minors
• Chapter IX: Employment of Women
• Chapter X: Vocational Safety, Health and Social Care
• Chapter XI: Work Related Injuries and Compensation
• Chapter XII: Work Associations
• Chapter XIII: Joint Committees, Collective Bargaining and Joint Agreements
• Chapter XIV: Collective Disputes
• Chapter XV: Inspection of Work
• Chapter XVI: Penalties


9. Property Law for Non-Qatari’s

A New Property Law No. (17) for Non-Qatari’s was issued in June 2004, allowing Non-Qatari’s to own residential properties in select projects (‘Pearl of the Gulf Island’ project, ‘West Bay Lagoon’ project and ‘Al Khor Resort’ project). The new law will be effective after a comprehensive memorandum of rules are put in place and approved by the Cabinet. According to Article 4 of the new law, Non-Qatari’s could own real estate in the selected projects mentioned earlier for a period of 99-years, extendable for a further 99-years. Article 5 of the new law states that Non-Qatari’s could own one or more residential units in these select projects. The law states that it is the responsibility of the buyer to safe-keep and do the necessary maintenance of the property during the period of ownership. The law also stipulates that the property can be used only for the purposes initially agreed upon. The new law mentions that owners are allowed to form building owners societies of which they can be members. The new law also states that properties owned by Non-Qatari’s could be transferred to legal heirs.

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