Qatar has become the latest Gulf state to slash its corporate tax rate, amid attempts to attract foreign investment to the region.
The Qatari government has decided to cut the rate from 35% to 10%, effective January 1, 2010.
The new rate will be the state’s first flat corporate tax rate. Previously, seven strata existed, ranging from 0% for companies that had annual incomes up to QR100,000 ($137,000), to 35% for companies who generate over QR5 million.
The new tax law will be levied on the renues of business activities, contracts – which are being partly or wholly implementted – properties, including the sales of stakes in the shareholding companies or the privately-owned companies whose assets are maily comprised of properties. Revenues of the natural sources excavation and exploration in the state and the loan interest rates obtained within the state are also taxable.
The move is designed to attract foreign investment to the state which was voted as the world’s friendliest tax environment in a survey earlier this year by Forbes 2009 Tax Misery & Reform Index.
Qatar is the latest Gulf state to cut its corporate tax rate in recent years. Five years ago Saudi Arabia reduced its rate from 45% to 20%, while Kuwait and Oman have also made cuts.
Qatar’s successful bid to host the FIFA World Cup in 2022 has transformed the emirate into a promised land for contractors.
Official estimates put the planned spending at about $60 billion on infrastructure such as high-speed rail network; international airport; 90,000 hotel rooms and 12 eco-friendly stadiums. With almost $100 billion in planned investments over the next 12 years, Qatar tends to be the biggest construction site in dollars per square meter.
Qatar plans to spend $4 billion on a stadium construction and refurbishment programme. The rail and metro networks are expected to cost more than $25 billion. In addition, there are plans to build the longest bridge in the world that will connect the tiny oil-rich State with nearby Kingdom Bahrain. A new airport with an increase capacity of 50 million passengers is also under construction, and is expected to be operational next year.
Qatar’s hosting of the 2022 World Cup is expected to boost the country’s economy, diversifying its investments and increasing spending on non-hydrocarbon sectors, in particular infrastructure, construction and manufacturing, reports say. Increased government spending will help maintain Qatar’s annual growth forecast of 15 per cent in 2010 and 16 per cent in 2011.