Foreign Direct Investment in Qatar: A Guide
The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelope our future. - John Maynard Keynes.
Foreign direct investment in Qatar has shown an upward trend during the past years. The country's political stability, a stable currency, high-quality infrastructure, and the lowest corporate tax rates in the world invites direct investment in Qatar. Qatar is a key international investor because of its large foreign exchange reserves. The principal areas attracting foreign investment in Qatar are oil and gas, construction, public works, and financial services.
Qatar aims to be a leading country in its business and foreign investment. In May 2018, the government approved a draft law allowing non-Qatari investors to own 100% capital in all sectors. The foreign ownership limit was increased to 49 percent by Qatar Stock Exchange-listed companies. The 2022 World Cup in Qatar is another anticipated event that would attract large foreign investors in the future. Several factors limit the expansion of FDI flow into Qatar. They are its policies governing the private sector, small domestic market, lack of skilled workforce, high cost of living, and the current diplomatic and commercial relations with other Arab countries.
The public-private partnership program was launched recently to improve the situation. According to the Doing business report issued by the World Bank, Qatar was ranked 77th out of 190 economies in 2020. This rise was due to a significant improvement concerning property registration. The relations between Qatar and Turkey have resulted in strong Foreign Direct Investment (FDI) between the two nations. The country ranked 38th position on the Global Foreign Direct Investment Country Attractiveness Index in 2018. The new foreign investment law came into effect in January 2019. The new law helps to make Qatar more attractive for investments.
Policies Towards Foreign Direct Investment
To enhance the objectives of the National Vision 2030, the government of Qatar has enacted laws to attract foreign investment in the economy. Qatar finalizes the significant infrastructure developments for hosting the 2022 FIFA World Cup. The government has allocated USD 13.2 billion for new non-oil sector projects in its Financial Year 2019. The government plans to increase LNG production by 43 percent by 2024.
In 2019, the government enacted a brand-new foreign investment law, Law 1/2019, to ease restrictions on foreign investment. The law permits full foreign ownership of businesses in most sectors with complete repatriation of profits, safety from expropriation, and numerous other benefits. Excepted sectors include banking, insurance, and commercial agencies. The foreign capital investment remains constrained at 49 percent barring a special dispensation from the Cabinet. Qatar's primary foreign investment promotion and evaluation is the Qatar Center under the Ministry of Commerce and Industry. The government is currently in the process of publishing the new law. Until then, Law 13/2000 applies. Full foreign ownership and repatriation of profits, tax incentives, and investment funds for small- and medium-sized enterprises in Qatar are given in the Qatar Financial Centre, Qatar Science and Technology Park, and the Qatar Free Zones.
Different modes of foreign direct Investments in Qatar are:
Savings account investments
A range of retail banks gives Expats in Qatar offers for opening current, savings, and deposit accounts. These banks include the International Bank of Qatar, Qatar Islamic Bank, Masraf Al Rayan, Mashreq, HSBC, Ahli Bank, Barwa Bank, and Doha Bank.
The excellent food, beaches, high living standards, and tax-free salaries make Doha a desirable place for investment. Doha had become a buyers' market now. The 2022 FIFA World Cup will create a welcome for investments. The first phase of the new Doha Metro in 2019 also supported a boost in the economy. The number of property purchase transactions is on rising. Resident expats and foreign investors can purchase villas and apartments in designated areas. These include Pearl Qatar, West Bay Lagoon, Lusail City, and Al Khor.
As a result of increasing property investment opportunities, it is competitive. Today, the banks that lend to expatriates are Qatar Islamic Bank, Mashrek, Commercial Bank of Qatar, Masraf Al Rayan, and HSBC. For making a purchase, submit a draft of the purchase agreement and register at the Ministry of Justice's Real Estate Registration Department by paying a registration cost of 0.25% of the property's total price. Once the title deed is received, go to the ministry's lease registration office if the property is leased. All the documentation should be in Arabic.
Qatar's new foreign investment law is a game-changer because it allows non-Qataris to assume 100 percent ownership of a business in any sector except banking, insurance, commercial agency activities, security, and defense. Furthermore, the world's 28th-freest economy is open for foreign investors in line with Qatar's long-term development plan National Vision 2030. The Ministry of Industry and Commerce states that the investments may be undertaken after submitting a request to the competent department, and they process the application within 15 days.
For foreign companies, the law stipulates that the contract must be executed through a local branch office, and the branch must have a commercial license before signing the contract.
Tax on investments
There is no personal income tax in Qatar. But there is business income, and it is taxed at the rate of 10 percent. There is no capital gains tax on the sale of real estate and securities by an individual. Real estate leasing is considered a commercial activity, and rental income is taxed at 10 percent. There are no property taxes. Qatar introduces a 5 percent value-added tax (VAT) in 2020.
Factors to consider when investments in Qatar include:
Investing in Qatar is different in terms of prospects, procedures, and profits. Factors to consider when investments in Qatar include:
- What investment opportunities are available as a foreigner or resident expat;
- How stable the regulations are around foreign investment in Qatar;
- What levels of protection do foreign investors receive in Qatar;
- If there are any incentives to attract foreign investment (e.g., loans, subsidies);
- How the regional geopolitical situation could affect Qatar's economy;
- If the country is politically stable;
- If the currency is stable;
- How developed the banking and financial system is
The inward FDI has a positive effect on economic growth. Qatar has various initiatives to encourage foreign direct investment. The two free zones Qatar Financial Centre and Qatar Science and Technology Park was designed for 100 percent foreign ownership. This is under the control of the Qatar Free Zone Authority 2019. The Qatar government continues its efforts to create a promising economic and investment environment.