GTA President No. 2 of 2011

Circular of the GTA President No. 2 of 2011

Excellencies / Ministers

M /s. Heads of government agencies and public authorities and institutions

M /s. Taxpayers and Auditor's Offices

Al-Doha

With reference to the provisions of the Income Tax Law issued by Law No. 21 of 2009, especially Articles 2, 3, 4, 11, 20 and 21 thereof, kindly follow the below instructions when making payments, in the implementation of contracts that are fully or partially completed in the State.

First: In case the payments are made to taxpayers residing in the State:

In the case of companies:
The company shall be resident if it is established in the State or its actual headquarters is located therein. This can be confirmed through the data contained in the Commercial Register Extract (which shall be valid), as the nationality of the company is Qatari, and its legal form follows one of the forms stipulated in the Commercial Companies Law issued by Law No. 5 of 2002 (partnership company, limited liability company, joint stock company, etc.).
If the payments are made in the implementation of a contract concluded with a resident company as set out above, the last payment shall be disbursed as soon as the company submits a valid tax card. Issuing a Tax Assessment or a No Objection Certificate (NOC) from the Public Revenues and Tax Department is not a must.
Regarding natural persons: If the payments are made to a natural person residing in the State, holding Qatari nationality (the nationality of one of the other GCC countries), and carrying out an activity in his name (within the framework of an individual institution), the last payment shall be disbursed by virtue of a valid tax card.

Second: If payments are made to non-resident taxpayers:

Regarding the taxpayers registered in the Commercial Register:
In this case, the data of the Commercial Register Extractor (which shall be valid) states that the taxpayer's nationality is foreign and takes the form of a branch.
If payments are made to a foreign taxpayer branch, the following provisions shall be considered:
1. In case the branch is a permanent establishment in the State:
  The said status can be confirmed through the Commercial Register Extractor, as there shall be a fixed address in the State, as well as by the fact that the activity of the branch is not linked to a specific period, contract or project. In this case, the last payment is disbursed by virtue of a valid tax card submitted by the branch. Issuing a Tax Assessment or a No Objection Certificate (NOC) from the Public Revenues and Tax Department is not a must.
2. In case the branch is not a permanent establishment in the State and the duration of its activity is more than one year:
  If the Commercial Register Extractor mentions that the branch activity is limited to a specific period of time or is involved in a specific contract or project, and the said period is more than one year, the last payment of the contract or 3% of its value shall be seized after excluding the value of supplies and work carried out abroad, whichever is greater and shall not be disbursed except after the taxpayer submits NOC issued by the Department.
  The last payment (or 3% of the contract value mentioned above if it is larger) shall be seized only, while the other payments (prior to the last payment or the amount equivalent to 3% of the contract value) shall be disbursed by the virtue of a valid tax card submitted by the taxpayer. Issuing a Tax Assessment or a No Objection Certificate (NOC) from the Public Revenues and Tax Department is not a must.
Regarding the taxpayers who are not registered in the commercial register or who are registered for an activity or project of less than one year:
If the payments are disbursed to a non-resident taxpayer who is not registered in the Commercial Register, or registered for a contract, activity or project for a period of less than one year, the conditions stipulated in Article 38 of the Executive Regulations of the aforementioned Income Tax Law shall be applied (a copy is attached).

Third: Exemption from tax and assuming the payment liability from your end:

With a view to rationalizing the granting of tax privileges and ensuring the maximum benefit from the Avoidance of Double Taxation Agreements concluded by the State, kindly do not include any conditions related to the exemption from income tax or assume the payment liability from your end instead of the taxpayers in the tender documents, contracts and agreements concluded by your entities, except after obtaining written approval from the Ministry of Economy and Finance. Noting that any obligation regarding exemption or assuming the tax liability related to ministries and other government agencies in tenders, agreements, and contracts contrary to the aforementioned, will not be binding on the Ministry of Economy and Finance.

In the event of a desire to exempt taxpayers from taxation before making contracts with them, they can be invited to submit an application to the Tax Exemption Committee of the Ministry, in accordance with Articles 51 to 65 of the aforementioned law.

Therefore, kindly instruct the relevant parties to strictly observe the provisions of this circular in order to protect the public interest and respect the provisions of the law.

Best regards,

//Signature Affixed//

Yousef Hussein Kamal

Minister of Economy and Finance