Ministry of Economy and Finance Public Revenues and Taxes Department Main features of the new Income Tax Law December 2009
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 2
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 3
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 4
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. 5
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% 6
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 7
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 8
(. 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 9
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 10
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 11
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 12
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 13
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) 14
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 15
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 16
Conclusion: What’s new? Registration and tax cards Withholding tax Some rules re determination of taxable income Tax rates Penalties Anti-avoidance 17
THANK YOU! 18
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