Business entities in Qatar
Healy Consultants will assist our Client engineer the optimum corporate structure. There are several ways of pursuing Qatar company, the most common being a limited liability company (LLC) with a 51% Qatar shareholder.
Wholly foreign owned entities
While the vast majority of Qatar business registration of LLCs are only 49% owned by foreign entrepreneurs, only rarely can the following entities conduct business in Qatar while 100% foreign owned:
- Foreign investors interested in Qatar company can incorporate a wholly foreign owned company of an LLC to provide professional services without having a Qatari national partner. Professional services include legal and accounting, IT and management consultancy, and marketing consultancy. However, a Qatari national must be appointed as a local service agent to represent the company when communicating with the Qatari government;
- A foreign company can register a 100% foreign owned representative office to engage in activities such as i) promoting the business of the parent company and ii) market research;
- Foreign entrepreneurs interested in company registration can wholly own a free zone limited liability company (LLC) without Qatari national shareholder involvement;
- Since, 2010, the government allows 100% foreign owned LLCs to develop major projects in the fields of agriculture, health education, tourism, IT, exploitation of natural resources and mining, consultancy services, technical and information technology, cultural, sports and entertainment services, or distribution services. Each business application is approved on a case-by-case basis by the Ministry of Business and Trade. In reality, only a small number of large foreign companies received the ministerial approval to operate as a 100% wholly owned subsidiary;
- A Qatar business setup can be wholly foreign owned if completing a “government qualified project”, approved by the industry minister on a case by case basis. The entity can be an Article 68 LLC or a branch of a foreign company. Examples of companies receiving such approvals include Shell, Exxon, and BNP.
Limited liability company (LLC)
- A Qatar LLC is the most common company used for business registration in Qatar. As always, the company is a separate legal entity or ‘person’. In particular, a company is separate from its owners, shareholders, and the persons who run it, the directors;
- A LLC must appoint i) a minimum of one director and two shareholders and ii) a minimum issued share capital of US$55,000 iii) a Qatari national to be shareholder and/or visa sponsor.
Free zone companies
Qatar company in free zones are limited to technology companies and financial services companies. Usually, only large multinational companies are allowed form free zone companies. Qatar business entities in the two Qatari free zones are legally exempt from tax and wholly foreign owned.
Qatar professional services company
- Foreign investors can incorporate a LLC to provide professional services without having a Qatari national partner. Professional services include legal and accounting consultancy, IT and management consultancy, and marketing consultancy;
- While the LLC can be 100% foreign ownership, a Qatari national must be appointed as local service agent to sponsor residence visas. The service agent has no direct involvement in the business, his role is limited to obtaining licenses, visas, and labor cards. He is paid a lump sum and/or percentage of profits or turnover.
Table of comparison between Qatar entities
It is a holding company which must be a shareholding company or limited liability company and which has financial and management control on the companies by owning at least 51% of that company. The minimum capital should be US$3.7 million.
A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. Joint ventures in Qatar are established in the form of a LLC where 51% is owned by a Qatari national, but the profit and loss distribution ratio can be mutually agreed.
Foreigners interested in Qatar business setup are allowed to invest in Qatar as sole traders in their personal name. A minimum capital of US$192,000 is required and the sole proprietorship must appoint a Qatari national as his service agent. This kind of Qatar business entity is used by doctors, engineers and lawyers.
Public shareholding company (PSC)
- This Qatar business entity is also known as a public joint stock company and is suitable for large projects or operations, involving a large investment of funds or raising private or public capital;
- If our Client plans to offer shares to the general public to raise capital, we recommend forming a public joint stock company. This entity is similar to a UK public limited company or German aktiengesellschaft (AG). To be registered on Doha stock exchange, the listed company must receive an Amiri decree;
- A PSC requires i) a minimum share capital of US$148 million ii) a minimum of 10 founders of which at least 51% owned by Qatari nationals iii) a board of directors consisting of a minimum of three to a maximum of fifteen persons. The chairman and a majority of directors must be Qatari nationals.
Private shareholding company
- This Qatar business entity is also known as a private joint stock company or an Article 68 company. This business entitiy can be wholly foreign owned if completing a “government qualified project”, approved by the industry minister on a case by case basis. Examples of companies receiving such approvals include Shell, Exxon, and BNP;
- This entity requires i) a minimum share capital of US$3.7 million and ii) a minimum of 5 shareholders. Foreign companies must negotiate the exact involvement of Qatari nationals as shareholders and directors and chairman.
Doing business in Qatar without a local company
To minimize business setup costs, our Clients sometimes implement the following strategies:
- Through a local agent or distributor, a foreign company is allowed sell its goods and services directly to Qatari customers;
- Foreign companies can also sell their franchise to a Qatar commercial agent or distributor, eliminating the need to hire local staff and incorporate a local company. Examples include Hertz, Baskin Robbins, and Pizza Hut.
Foreign branch office and foreign representative office
- Article 3 of The Foreign Investment Law allows a branch of a foreign company to be registered in Qatar if that foreign company has a government contract which is performing a specific project, which “facilitates the performance of a public service or utility” including engineering, construction, industrial, agricultural, and tourism. Specific approval is required from the Minister of Business & Trade;
- The foreign branch cannot conduct commercial activity unrelated to the specific government for which it is registered. The foreign branch is usually wound up after the specific contract is complete. Foreign companies registered under this category do not need a sponsor or service agent. The branch office will be fully taxable unless it is granted a special exemption by the Minister of Business and Trade;
- While a representative office is 100% foreign-owned and controlled, it is not permitted to make direct sales within Qatar. Such an office will only engage in activities such as i) promoting the business of the parent company and ii) market research. A local Qatari agent or distributor must be appointed to sell goods and provide services to local companies. Though the representational office may be registered in the commercial registry, it really is a ‘shop window’ used to promote a foreign company in Qatar and to introduce its products to Qatari companies.
How to setup a foreign branch or a representative office in Qatar
- To setup a branch of a foreign company in Qatar, the incorporation documents of the mother company must be legalized in i) the Qatari embassy in the country of its incorporation and then ii) by the Ministry of Foreign Affairs of Qatar;
- Parent company documents to be translated into Arabic include i) two years audited financial statements ii) a board of directors’ resolution authorizing opening of the branch in Qatar iii) a power of attorney issued in favor of the general manager of the branch iv) parent company’s memorandum of association and certificate of incorporation;
- The branch or the representative office must i) sign an agency agreement with a Qatari national and ii) sign a Qatar premises lease agreement;
- To support Qatar business setup, Healy Consultants submits a complete license application to the Ministry of Economy and Commerce comprising i) an agency agreement ii) name reservation certificate iii) lease agreement iv) copy of the passport of the office general manager v) a bank guarantee of US$50,000 in favour of the Ministry of Economy;
- The ministry will forward the application to the Federal Foreign Companies Committee to obtain approval of the specific business activity of the branch or representative office. Thereafter, the Ministry of Economy and Commerce will issue the required ministerial license specifying the activity to be practised by the foreign company;
- The branch or representative office will be i) entered in the Qatar Commercial Register ii) entered in the Foreign Companies Register of the Ministry of Economy and Commerce and iii) registered with the Qatar Chamber of Commerce and Industry;
- Submit a request along with a certificate or memorandum of association of the parent company, and the certified power of attorney for the nominated manager in Qatar for the setup of the Qatar representative office, to the Investment Promotion Department at the Ministry of Economy and Commerce.
Frequently asked questions
What is the minimum share capital required for the different business entities in Qatar?A Qatar LLC requires a minimum share capital of US$55,000.
How many Qatar resident shareholders will I need to incorporate a Qatar LLC?This Qatar business structure will require 51% shareholding from Qatar citizen(s).
Which are the entity types in Qatar that require an annual audit?The forms of Qatar business entities that require an annual audit are LLCs and branch offices. Representative offices do not require an annual audit.