Foreign
Investment
1.
Free of Transfer
2. Foreign Participation
3. Investment Incentives
4. Foreign Investment Finance
5. Foreign Trade
6. Registration of Patents, Trademarks and Intellectual Property
Rights
7. Foreign Investment Law
8. Labour Law
9. Property Law for Non-Qatari’s
Qatar
welcomes foreign participation in joint ventures through technology
supply, market administration and equity participation. Government
initiatives to attract the flow of Foreign Capital into the State
can be attributed to various investment incentives provided. The
State’s commitment in this direction was further witnessed
through the passing of the Foreign Investment Law by an Emiri
decree in mid-October 2000, the setting up of the “Investment
Promotion Department” at the Ministry of Economy and Commerce,
the law establishing the Qatar Science and Technology Park, the
law establishing the Qatar Financial Centre, and the new Commercial
Law in 2006.
1.
Free of Transfer
A share holding company (joint stock) is required to transfer
a sum equal to 10% of its profits for the year to a legal reserve
until the reserve amounts to at least 50% of the paid-up share
capital. This legal requirement represents the only restriction
on a foreign participating joint stock company intending to remit
all its annual profits generated in Qatar back to the holding
company’s base of operations. Equity capital, loan capital,
and all income streams arising in Qatar are freely remittable.
No foreign exchange restrictions exist.
2.
Foreign Participation
Agency Relationship
Foreigners, whether individuals or corporations, are not permitted
to import goods and services on their own account into Qatar;
they must sell their goods to a Qatari agent or distributor which
will then market them locally. Any personnel seconded by the foreign
business must be employees of the Qatari agent in whose name all
bids and contracts must be signed. A new Commercial Agents Law
No.(8) was enacted in 2002, repealing the earlier Law No.(4) of
1986. The main highlights of the new law is as follows:
-
Merchants
registered in the imports register are allowed to import goods
covered under agency agreements, subject to approval by the
Minister of Economy and Commerce;
-
The Commercial Agent shall be entitled to a commission determined
by the Ministry of Economy and Commerce, which shall not exceed
5% of the value of goods imported for trading;
-
The Commercial Affairs Department at the Ministry of Economy
and Commerce shall maintain a register to register Commercial
Agents;
-
Agencies are confined to Qatari individuals or to companies
owned exclusively by Qataris.
-
The Agency agreement can be for a limited or unlimited term.
In the case of a limited term agreement, the Agency shall
expire upon the expiry of the defined term, unless both parties
agree to the renewal. In the case of an unlimited term Agency
agreement, unless both parties agree to the termination, a
termination may be brought about only by an authority commissioned
to settle such disputes;
-
Commercial Agents and their Principals are obliged to provide
spare parts and the necessary workshop facilities to consumers
for the products covered by the Agency.
-
The courts of the State of Qatar shall be competent to deal
with disputes arising between the Agent and the Principal
with reference to the Agency contract, unless there is an
agreement to the contrary.
Off-Shore
Banking Units and Insurance
There are specific restrictions of foreign investment in banks
and insurance companies which are contained in the laws regulating
these sectors. Law No.19 of 1997 allowed the establishment of
Offshore Banking Units (OBUs) in Qatar. Capital requirements of
OBUs are set at QR 20 million for Qatari banks and QR 10 million
for foreign banks. OBUs are not permitted to accept deposits and
provide asset
management for citizens and residents of Qatar unless specifically
approved by Qatar Central Bank.
GCC Banks Branches
The Governors of GCC Central Banks agreed at their 25th meeting
in Riyadh in October 1997 to allow GCC national banks to open
branches in other GCC member states provided the following main
conditions are met:
3.
Investment Incentives
Qatar welcomes foreign participation in joint ventures through
technology supply, market administration and equity participation.
The Government offers several attractive incentives for joint
ventures, such as:
In
addition to the above, the Government also offers the following
incentives:
-
5-year renewable tax holidays (Based on Government approval)
-
No
income tax on salaries of expatriates;
-
No
exchange control regulations - the Qatari Riyal is freely
convertible at a parity of $1=Qatari Riyals 3.64, a rate of
exchange which has been stable for two decades;
-
Excellent
medical and educational facilities;
-
Easy
access to world markets with first class air and sea connections;
-
Excellent
telecommunications facilities;
-
Liberal
immigration and employment rules to enable import of skilled
and unskilled labour
Economic
liberalisation measures have been introduced to encourage inward
investment. The private sector has been given a greater role to
play in the development drive. In the pursuit of developing a
strong private sector with an enhanced industrial base, the Qatar
Development Bank (QDB) was established in 1997, with an authorised
capital of QR 200 million ($54.9 million). QDB is 100% owned by
the State of Qatar and provides loans at competitive rates of
interest.
Generous
incentives have also been granted to private investors and measures
were taken to encourage grass-roots projects and joint-venture
investments. Non-Qatari capital is welcomed in business and industrial
investments in the country. Economic reform decrees have been
issued to activate industrial investment activities and to accelerate
further the current rapid pace of development. Amongst these were
proposals for liberalising the present restrictions upon foreign
ownership of Qatari enterprises and plans for the re-codification
of the principal commercial law statutes in order to meet the
requirements of the next century.
The
Foreign Investment Law was approved in October 2000. The law allows
foreigners to own up to 100% share in certain projects.
4. Foreign Investment Finance
There are no restrictions on foreign investors using their own
funds to participate in Qatari businesses. If a foreign investor’s
own funds are insufficient to finance the business, the investor
may approach a Qatari, GCC, or indeed any bank for finance. Bank
financing in Qatar is granted on normal commercial terms.
5. Foreign Trade
Foreign Trade in Qatar is regulated by the Qatar Customs Law No.
5 of 1988. In general, a person wishing to import goods into Qatar
for sale, must be registered in the Importers Register and be
approved by Qatar Chamber of Commerce and Industry (QCCI). The
standard rate of customs duty in Qatar is 5% (ad valorem) in accordance
with the GCC customs union put in place since January 2003. Most
goods have a general customs duty of 5% as shown below, and others
are as following:
General Items .......................................5%
Cement ...............................................(Currently
Exempt)
Steel (10 mm & above) ..........................20%
Tobacco ..............................................100%
Goods
manufactured in GCC countries are exempt from customs duty provided
they are accompanied by a certificate of origin issued by the
Chamber of Commerce in the GCC state of origin.
Customs
Exemptions
Exemptions from customs duty apply to the following items:
- Personal
effects and used household appliances and furniture belonging
to foreign employees arriving in Qatar for the purpose of residence;
- Equipment,
materials and other supplies belonging to Government entities
or state companies;
- Food products
such as grains, livestock, tea, coffee, sugar, rice, milk for
infants and other essential consumer items;
- Goods imported
by embassies, legations and consulates.
The
following documents are required for releasing imports:
- Invoice
and shipping document;
- certificate
of origin;
- Producer’s
declaration of observance of the Israeli boycott rules;
- Full description
of goods;
- Health
and quality certificate, if applicable.
Valuation
The basic value of the assessment of duty is the CIF value of
the goods. Where only the FOB price can be established, duty is
computed based upon the FOB price plus 15%.
Temporary
Imports
The Qatar customs authorities allow certain goods, including equipment,
to be imported on a temporary basis. Temporary imports are subject
to the prior approval of the Director General of Customs. This
approval is normally valid for a period of 6 months, but may be
extended by a further 6 months. A longer “temporary import”
period may be granted in exceptional cases at the option of the
customs authorities. A cheque or bank guarantee equivalent to
the duty on a normal import must be deposited with customs to
secure this temporary import arrangement.
Duty
Exemptions
As a general rule, duty exemptions will not normally be granted.
However, it is stated Government policy to allow customs duty
exemptions for Qatari joint venture entities, where there is a
substantial investment from the foreign joint venture party. In
recent years, blanket duty exemption for construction materials
and equipment imports have been granted to the principal contractors
working on projects undertaken in the oil, gas, water and electricity
sectors.
Free
Zones
The Qatar Science and Technology Park (QSTP), which is part of
the ‘Education City’, has been granted free trade
zone status and another industrial city is being developed, which
will also be granted free trade zone status.
Personal
Effects and Restrictions
Once a foreign employee is resident in Qatar, personal effects
may be imported free of customs duty. The import and sale of alcohol
and pork products are prohibited. The import of pets are allowed.
A valid health certificate issued by a Veterinarian registered
with the Public Health Authorities in the country of departure
must be produced for pets imported into Qatar. There is no known
rabies in Qatar, but animals being imported must be immunised
against this disease.
Exports
No duties are levied on exports. It is forbidden to export goods
to Israel or to export certain goods such as subsidised foodstuffs
or antiques.
6.
Registration of Patents, Trademarks and Intellectual Property
Rights
Patents
are protected by a system of registration for an initial period
of 10 years; thereafter they may be registered for a further 5
years only. It is possible for patents to be licensed. Trademarks
may be registered for 10 years and renewed indefinitely for further
10 year periods. If a trademark has not been used for a 5 year
period, an interested party can apply to the courts to have it
cancelled. Registration gives an owner the exclusive right to
use a trademark on the goods for which the trademark is registered.
The owner may prevent other parties from using the trademark on
competing products.
The
Copyright Law No. (7) was enacted in 2002, repealing the earlier
Law No. (25) of 1995. Under the law, protection is granted to
original literary and artistic works, irrespective of the value,
quality, purpose or mode of expression of these works. The protection
shall cover mainly the following works:
- Books,
pamphlets and other writings.
- Works delivered
orally such as lectures, addresses, sermons, or similar works
such as poems and hymns.
- Dramatic
and dramatico musical works.
- Musical
works, whether or not they include accompanying words.
- Choreographic
works and pantomimes.
- Audiovisual
works.
- Photographic
and similar works.
- Works of
applied art, whether handicraft or produced on an industrial
scale.
- Works of
drawing and painting, architecture, sculpture, decorated arts,
engravings, sketches, designs and three-dimensional geographic
or topographic works.
- Computer
programs.
Protection shall also extend to the title of the work if it is
original.
The law includes penalties for violation including fines ranging
from QR 30,000 to QR 100,000 and a term of imprisonment ranging
from six months to one year. The law is enforced by a Copyright
Bureau consisting of 12 inspectors.
7.
Foreign Investment Law
Qatari Law No. (13) for the year 2000 for the Regulation of Foreign
Capital Investment in Economic Activity.
The following is an English translation of the official Arabic
text of the new Qatari legislation regarding foreign investment
as prepared by Al-Kaabi Lawyers and Legal Consultants in Doha.
We
Jassim Bin Hamad Al Thani, Deputy Emir of the State of Qatar
Having perused the temporary amended constitution, particularly
Articles (22), (23), (34) and (51)
thereof,
And the Commercial Companies Law No. (11) for the year 1981 as
amended by Law No. (9) for the year
1998
And Customs Law No. (5) for the year 1988 and the laws amending
it.
And Law No. (25) for the year 1990 regulating non-Qatari capital
investment in economic activity, as
amended by Law No. (9) for the year 1995.
And Law No. (11) for the year 1993 concerning income tax.
And Law No. (22) for the year 1993 regulating the Ministry of
Finance, Economy and Commerce and
defining its powers.
And upon the proposal of the Minister of Finance, Economy and
Commerce.
And the draft law submitted by the Council of Ministers.
And having consulted the Advisory Council.
Have promulgated the following law:
Definitions
Article 1
In the implementation of the provisions of this law, the following
words and phrases shall have the meanings shown against each of
them, unless the text indicates otherwise:
The Ministry :.................................. Ministry of Finance,
Economy and Commerce
The
Minister :.................................. Minister of Finance,
Economy and Commerce
Foreign
Investor :............................. Non-Qatari persons, whether
natural or juristic, who invest their monies in any of the projects
in which
direct investment is permitted by the government in accordance
with provisions of this law.
Invested
Foreign Capital :..................What is being invested by foreign
investors in cash or inkind, monies or rights having financial
value in the State of Qatar, including:
1. Cash remitted into the country through banks and licensed financial
companies;
2. Assets in kind imported for the purpose of investment in accordance
with the provisions of this law;
3. Profits, revenues and reserves emanating from investing the
foreign capital in the project, whereby the capital of that project
has been increased, or if invested in any of the projects permitted
by the provisions of this law;
4. Intangible rights such as licenses, patents and trademarks
registered in the State;
Foreign
Investment :........................ Foreign capital invested
in any of the activities permitted in accordance with the provisions
of this law;
The Investment of Foreign Capital
Article
2
1. Subject to Clause (3) of this Article, foreign investors may
invest in all sectors of national economy provided they have one
or more Qatari partners whose share shall not be less than 51%
of the capital, and the company is incorporated in a correct manner
in accordance with the rules of law.
2. It is however permissible, by a decision from the Minister,
for foreign investors, to exceed the percentage of their participation
from 49% to 100% of the project’s capital in the sectors
of agriculture, industry, health, education, tourism and the development
and exploitation of natural resources or energy or mining, provided
it is in conformity with the development plan in the state. Preference
to projects that achieve the optimum exploitation of locally available
raw materials, export industries or those providing a new product
or using modern technology, in addition to projects that assist
in residing internationally famous industries and projects that
give attention to national manpower and its rehabilitation.
3. It is prohibited for the foreign investments referred to in
the two previous Clauses to invest in the fields of Banking, Insurance
Companies, Commercial Agencies and the purchase of real estate.
Article
3
The Minister may, after consulting the relevant authority, authorise
foreign companies which are engaged in contracts in the state,
to perform such contracts if they facilitate the performance of
a public service or utility.
Article
4
Where no specific provision is provided for this law, the provisions
of the laws prevailing in the state must be followed with regard
to the foreign investor obtaining the necessary licenses to engage
in any of the activities in which he is authorised to invest.
Investment Incentives
Article 5
Necessary land must be alloted to any foreign investor establishing
his investment project, through long term lease for a period not
exceeding (50) years, renewable.
Article
6
Foreign investor may import for his investment project, what ever
is required for the establishment operation and expansion of the
project, in accordance with the laws prevailing in the state.
Article
7
The Ministry may:
1. E xempt the foreign capital invested in the fields provided
for in Article (2) of this law from income tax for a period not
exceeding ten years from the date of operation of the investment
project.
2. Grant foreign investment projects customs duties exemptions
with regard to imported machinery and equipment necessary for
its establishment.
3. Grant foreign investment projects in the field of industry,
custom duties exemption with regard to primary or semi-manufactured
materials necessary for production not available in local market.
Article 8
1. F oreign investment shall not be subject, whether directly
or indirectly, to expropriation or any other action with similar
effect, unless it is for public benefit and done on a non-discriminating
basis against quick and adequate compensation in accordance with
legal procedures and the general principles provided for in Clause
(2) of this Article.
2. C ompensation shall be equivalent to the real economic value
of the investment that has been expropriated at the time of expropriation
or at time of the announcement relating thereto, and it shall
be determined in accordance with normal economic situation prior
to any threat of expropriation, and the due compensation must
be paid without delay, and shall be freely transferable. The compensation
aforesaid will carry interest at the prevailing rate in the state
until the date of payment.
Article
9
1. F oreign investors have the freedom to transfer investments
to and from abroad without delay, such transfers include:
I - Investment returns;
II - The proceeds of sale or liquidation of all or part of the
investment;
III - The proceeds of monies resulting from settling investment
disputes;
IV - The compensation provided for in Article (8) of this law.
2. Transfer of funds into any convertible currency shall be at
the exchange rate prevailing on the date oftransfer.
Article 10
A foreign investor has the right to transfer his investment to
another foreign investor or to a Qatari citizen, or to relinquish
the same to his Qatari partner in the case of partnership, provided
it is carried out in accordance with the prevailing laws and regulations.
In aforesaid cases, the investment shall continue to be treated
in accordance with this law, provided thenew investor continues
to work in the project, and who shall replace the previous investor
in rights and obligations.
General
Provisions
Article 11
Any dispute arising between the foreign investor and others may
be settled through an international or local arbitral panel.
Article
12
The provisions of this law shall not apply to:
1. C ompanies and individuals to whom the state entrusts the task
of extraction, exploitation or management of natural resources
by virtue of a concession or special agreement, to the extent
which does not contradict what is provided for in the concession
contract or any special agreement.
2. C ompanies incorporated by the government or in which the government
and other public corporations or departments participate in association
with foreign investors in accordance with Article (9) of the commercial
companies law referred to above.
Article
13
The foreign investor must protect the environment from pollution,
and must abide by the laws, regulations and directives relating
to public security and safety, and must refrain from any act which
might infringe the state’s public order and public morals.
Article
14
The provisions of this law shall not prejudice the benefits and
tax exemptions and any other guarantees and incentives awarded
to the companies and firms existing at the time when it shall
come into force. Such companies and firms shall continue to retain
those benefits, exemptions, guarantees and incentives in accordance
with the legislation, agreements and contracts they are derived
from.
Penalties and Final Provisions
Article 15
The Ministry shall notify the foreign investor if he contravenes
any provision of this law requiring him to rectify such violation
within a period not exceeding three months from the date of notification.
Article
16
Without prejudice to any more severe penalty stipulated in any
other laws, any foreigner who practices an economic activity contrary
to the provisions of this law shall be punished by a fine of not
less than fifty thousand Riyals and not exceeding one hundred
thousand Riyals. Additionally, any citizen who participates with
a foreigner in such activity shall be subject to the same punishment.
Article
17
The technical staff of the Ministry delegated by the Minister
shall have the capacity of legal seizure officers, to investigate
and identify crimes committed in contravention of the provisions
of this law and the implementing decisions thereof. They have,
in this respect, the right to access premises and firms subject
to this law and to inspect and examine their documents and records.
Article
18
Law No. (25) for the year 1990 referred to above shall be repealed.
Article
19
The Minister will issue bills and decisions necessary to execute
the provisions of this law, including determining the fees.
Article
20
All parties concerned, each in its own competence, shall execute
this law, and it will come into force from the date of its publication
in the official Gazette.
Jassim
Bin Hamad Al Thani
Deputy Emir of the State of Qatar
Issued at Diwan Amiri
On: 19.07.1421
Corresponding to: 16.10.2000
8. Labour Law
A New Labour Law No. (14) was issued in May 2004, replacing the
earlier Law No. (3) of 1962. The new comprehensive law provides
for the protection of the rights of workers, both national and
expatriate, and gives Qatari individuals the right to form workers’
associations. The law grants equal rights to men and women on
matters of wages, training and promotion, and protects the rights
of working women. The new law also stipulates working hours, holidays,
leave, workplace safety norms, payments and end-ofservice benefits.
The new law states that employment contracts should be written
and authenticated by the Labour Department and issued in triplicate.
The following Chapters form the New Labour Law No. (14) of 2004
:
• Chapter I: Definitions and General Rules
• Chapter II: Vocation Training
• Chapter III: Employment of Workers
• Chapter IV: Individual Relations (Contracts)
• Chapter V: Authority of Employers
• Chapter VI: Payments (Salary, Leave Pay and End-of-Service
Benefits)
• Chapter VII: Work Hours and Leave
• Chapter VIII: Employment of Minors
• Chapter IX: Employment of Women
• Chapter X: Vocational Safety, Health and Social Care
• Chapter XI: Work Related Injuries and Compensation
• Chapter XII: Work Associations
• Chapter XIII: Joint Committees, Collective Bargaining
and Joint Agreements
• Chapter XIV: Collective Disputes
• Chapter XV: Inspection of Work
• Chapter XVI: Penalties
9. Property Law for Non-Qatari’s
A New Property Law No. (17) for Non-Qatari’s was issued
in June 2004, allowing Non-Qatari’s to own residential properties
in select projects (‘Pearl of the Gulf Island’ project,
‘West Bay Lagoon’ project and ‘Al Khor Resort’
project). The new law will be effective after a comprehensive
memorandum of rules are put in place and approved by the Cabinet.
According to Article 4 of the new law, Non-Qatari’s could
own real estate in the selected projects mentioned earlier for
a period of 99-years, extendable for a further 99-years. Article
5 of the new law states that Non-Qatari’s could own one
or more residential units in these select projects. The law states
that it is the responsibility of the buyer to safe-keep and do
the necessary maintenance of the property during the period of
ownership. The law also stipulates that the property can be used
only for the purposes initially agreed upon. The new law mentions
that owners are allowed to form building owners societies of which
they can be members. The new law also states that properties owned
by Non-Qatari’s could be transferred to legal heirs.
