Setting up a Qatar financial company in 2023
Fortunately, setting up a financial company in Qatar is straightforward, and attractive to multinational Clients. For example, a Qatar Financial Centre (QFC) free zone company can i) be 100% foreign-owned ii) freely repatriate profits out of the country with no withholding tax iii) tap into Qatar’s nearly 60 double tax treaties iv) pay just 10% tax on local profits iv) receive legally tax-exempt international profits v) pay zero capital gains tax vi) pay zero personal income tax and vii) pay no GST or VAT.
Securing a QFC licence
- To secure a QFC licence, our Client must demonstrate to the regulating authority that i) the company is sufficiently funded ii) it has a sound business plan and iii) has appropriate compliance plans in place. Even after these conditions are satisfied, it can take a minimum of two months to receive the licence. The company must also rent office space at QFC.
- Examples of regulatory licensed entities include i) banks and brokers and ii) insurance companies iii) financial institutions iv) asset managers v) securities firms and vi) companies with security and defence activities within Qatar.
- Examples of regulatory licensed activities include i) accepting deposits and providing credit ii) operating a collective investment fund iii) providing custody services iv) effecting contracts of insurance and v) captive insurance business.
- To operate in or from the QFC, a firm needs to be incorporated by the QFC Companies Registration Office, licensed and supervised by the Qatar Financial Centre Regulatory Authority (QFCA). This regulated entity is known as ‘An Authorised Firm’.
Types of QFC companies allowed without a regulatory licence
- Fortunately, QFC allows multi-national Clients to establish shell companies to conduct local and international business including i) engineering and architectural and IT consulting companies ii) fiduciary and trustee services iii) legal and accounting and tax consulting companies and iv) treasury operations. See table below to view simple, practical applications for each entity type.
- Fortunately, these entities neither require a Qatari regulatory licence nor local staff nor local physical office premises. These entities are known as ‘Licensed Firms’. The entities can be in the form of i) an LLC ii) a Limited Liability Partnership or iii) a branch of an overseas company. Healy Consultants Group recommends the simple common LLC.
- Multi-national Clients approach Healy Consultants Group to establish an entity to engage in i) international mergers or acquisitions ii) holding or disposing of assets iii) owning subsidiaries iv) securitisation or raising funds v) management and treasury functions or vi) investment and financing-type activities.
- Business activities not allowed to flow through these type of entities include i) construction and manufacturing in Qatar or ii) imports to and sale of goods in Qatar or iii) labour intensive services to the Qatari market.
No About the entity Holding company Investment company Special Purpose Company Family asset company 1. How can it be used? Own international subsidiaries Investments and finance M&A transaction M&A transaction 2. Is a QFC regulatory licence required? No No No No 3. A QFCA trading licence required? Yes Yes Yes Yes 4. Must it have local staff and physical office premises? No No No No 5. Can it do business in Qatar? Yes Yes Yes Yes 6. Can it be 100% foreign-owned? Yes Yes Yes Yes 7. Is it fast to establish? Yes Yes Yes Yes 8. Is a Qatari bank account allowed? Yes Yes Yes Yes 9. Can it access double taxation treaties? Yes Yes Yes Yes 10. Must the M&AA be very specific and limited? Yes Yes Yes Yes 11. Must it file annual audited financial statements Yes Yes No No 12. Corporation tax on annual net profits 10% 10% 10% 10% 13. If properly structured, can it be legally tax-exempt? Yes Yes Yes Yes 14. Is there a public register of shareholders and directors? Yes Yes Yes Yes 15. Minimum paid-up share capital US$ 1 US$ 1 US$ 1 US$ 1 16. The regulator is QFC QFC QFC QFC 17. Other QFC rules to comply with QFCA QFCA QFCA QFCA
Opportunities for multi-national Clients
- To tempt multinational companies to Qatar, the QFC has an attractive incentives including i) offering free offices and ii) highly-competitive tax incentives iii) seed capital to cover five years of operating expenses in return for a 10-year commitment and iv) the QFC courts seeming to apply English-style common law.
- Since QFC is not a separate geographical zone, all QFC entities are allowed to have an office and conduct business anywhere in Qatar provided QFCA approval is obtained in respect of the particular premises. Thus our Client can serve both the local and international market.
- QFC has no restrictions in terms of currency in which QFC-regulated entities may deal. They may deal in, or take deposits, in Qatari Riyals or any other currency.
- In January 2021, a GCC-led economic and political embargo on Qatar was lifted. Overseas funds pour back into Qatar, especially from high net worth individuals from Saudi Arabia and the UAE. Consequently, demand for local financial services is growing. This is a good time to launch financial services innovations into the local market including i) payment solutions ii) e-wallets iii) wealth management services iv) cybersecurity solutions v) blockchain technologies and others.
- Qatar will pull out all the stops to compete with Saudi Arabia, the UAE and Bahrain, including in the financial services sector. The QFC aims to bring in US$25 billion in investments by 2022. In January 2020, 800 FinTech firms were operating in QFC. The National Fintech Strategy will see this figure rise. Covid-19 is accelerating demand for financial technology (FinTech) services. Qatar is trying to attract more FinTech companies to its shores. For example:
- QFC plans to waive i) licence application fees and ii) first-year licence renewal fees for FinTechs.
- Qatar Fintech Hub (QFTH) is a local incubator/accelerator, assisting FinTechs to i) access local and international markets ii) find investors and iii) relocate to Qatar from overseas.
- Islamic banks account for more than a quarter of all financing in Qatar. In 2021, some local Islamic banks will merge, boosting bank capitalisation. Islamic FinTechs will be a key beneficiary of this trend, because they will have access to even more funding opportunities.
About Qatar Financial Centre
- QFC was set up in 2005 to attract international financial institutions and firms to establish business operations in Doha.
- There are currently more than 900 local and international companies in the QFC, comprising investment and private banking, (re)insurance and asset management firms (each of which is regulated); and consultancy service providers, law firms and financial services recruitment firms.
- The QFC Authority manages (QFCA) and maintains the QFC legal and tax environment, and licenses ﬁrms to conduct business in or from the QFC.
- The QFC Regulatory Authority is the independent regulator of the QFC, established to authorise and regulate firms and individuals conducting financial services in or from the QFC.
- In the interests of transparency, QFC-licensed company details and information are searchable, accessible and available to all (click link). This includes information about a company’s permitted activities.
Engagement fees and timelines
Our typical fees to set up a QFC company amount to US$33,475 and includes i) registering the company with the QFCA ii) assisting our Client to locate office space in QFC iii) government licence fees iv) a Qatar corporate bank account and v) project management fees for two months.
Click the invoice below for details.
Risks to setting up a financial company in Qatar
- There is a risk that Qatar’s relations with Saudi Arabia, the UAE and Bahrain will once again sour, and that the country will once again be isolated by sanctions. Dubai, Bahrain and Riyadh lie in wait to pry financial services business away from Doha.
- Qatar’s financial services sector is not as well regulated as Dubai or Bahrain. For FinTechs, in particular, this is a growth constraint. Few FinTechs would currently choose Qatar as a base from which to scale up. Furthermore, there is little in the way of angel investor community in Qatar.
Healy Consultants Group is happy to help multi-national Clients’ with Qatari business set up. Communicate with us on the contact details below.