Qatar Withholding Tax Requirements

Qatar’s withholding tax (WHT) system has evolved significantly in recent years, particularly regarding its application to services provided from outside the country. This report explores the comprehensive framework of Qatar’s withholding tax requirements, with special emphasis on how these regulations impact services performed outside Qatar but utilized within the country.

Basic Framework of Qatar’s Withholding Tax System

General Scope and Application

Qatar imposes a unified 5% withholding tax on payments made to non-residents for services that are utilized within Qatar[1][2]. This tax represents a mechanism through which the Qatar General Tax Authority (GTA) collects taxes on income earned by foreign entities from Qatari sources. The WHT system is designed to ensure tax compliance by having the Qatari entity making the payment withhold a portion of it and remit that amount directly to tax authorities[2].

The withholding tax applies only if the payment is made to non-resident individuals or companies with respect to activities not connected to a Permanent Establishment (PE) in Qatar[1]. In practice, this means the tax is primarily applicable when payments are made to service providers who do not hold a valid Qatari tax card[1].

Types of Payments Subject to WHT

The following types of payments to non-residents are subject to withholding tax in Qatar:

  • Royalties (5%)[1][2][3]
  • Technical service fees (5%)[2][3]
  • Interest on loans (5%)[1][2]
  • Commissions (5%)[1][2][3]
  • Brokerage fees (5%)[1][3]
  • Management or consultancy fees (5%)[2][3]
  • Directors’ fees and attendance fees (5%)[3]
  • Any other payments for services carried out inside or outside Qatar that are utilized within Qatar (5%)[1][3]
Qatar-withholding-tax-requirements

The “Consumption Test” for Services Outside Qatar

Evolution from Performance Test to Consumption Test

The most significant development in Qatar’s WHT regime, particularly relevant to services provided from outside the country, is the shift from a “Performance Test” to a “Consumption Test”[3][4]. Previously, WHT applicability was determined by where the services were physically performed (the Performance Test)[3]. However, the new Executive Regulations have introduced a broader scope through the Consumption Test[3][4].

Current Application to External Services

Under the current regulations, services are deemed to be performed in Qatar if they are “used, consumed or exploited” in the State of Qatar[3][5]. Critically, this applies even if the services are carried out wholly or partially outside Qatar[1][3][5]. The delivery location of the service is no longer the determining factor for WHT applicability[4].

This means that most services availed by Qatari entities from non-residents are now likely to become subject to WHT, regardless of where they are physically performed[4]. The focus has shifted from where the service provider is located to where the benefit of the service is realized.

Practical Implications for Service Providers

For foreign service providers, this expanded definition means that virtually any service that benefits a Qatari entity may be subject to WHT, even if the service provider never physically enters Qatar[4]. For example, consulting services, software development, design work, or management advisory services provided entirely from abroad would be subject to the 5% WHT if they benefit a Qatari recipient[2][3].

Compliance Requirements and Administrative Procedures

Withholding and Remittance Obligations

The responsibility for withholding and remitting the tax falls on the Qatari payer, which includes:[4]

  • Natural persons carrying on activities in Qatar
  • Legal persons resident in Qatar
  • Ministries and other government agencies
  • Permanent establishments in Qatar related to non-residents

The Qatari entity must withhold 5% of the payment amount and remit it to the GTA by the 16th day of the month following the payment[1][3][5]. All monthly WHT statements must be filed online through the Dhareeba tax portal[1].

Documentation and Certification

The payer must provide the service provider with a certificate proving the tax deduction using forms prepared by the GTA[4]. Additionally, a statement of all amounts subject to WHT for the taxable year must be submitted along with final accounts when filing the payer’s annual tax return[4].

The “Deemed Payment” Provision

A particularly important aspect of Qatar’s WHT system is the “deemed payment” provision. Outstanding amounts that remain unpaid to a service provider are “deemed” to be paid after 12 months from their payment due date (with certain exceptions for government entities)[1][3][5]. This means WHT must be remitted to the GTA at this 12-month point even if the actual payment to the non-resident service provider hasn’t occurred[3][5][4].

This represents a significant change from previous practice, where WHT was only due upon actual settlement of the invoice[3][5].

Exemptions and Relief Mechanisms

Domestic Exemptions

Certain payments are exempted from WHT in Qatar:[1][4]

  • Dividends are not subject to WHT
  • Payments to entities holding a valid Qatari tax card
  • Payments to entities registered with the Qatar Financial Centre (QFC)
  • Certain interest payments, including bank interest and bonds/securities issued by Qatar

Double Taxation Agreements (DTAs)

Qatar has signed double taxation agreements with many countries that may provide reduced WHT rates or exemptions[1][2]. The comprehensive treaty network includes over 40 countries, with varying provisions regarding WHT rates[4].

However, it’s important to note that Qatar implements these treaties through a “pay and reclaim mechanism”[4]. This means that even when a treaty provides for a reduced rate or exemption:

  1. The full 5% WHT must still be withheld initially
  2. The non-resident must then file a refund application with the GTA
  3. If approved, the excess tax will be refunded

This process has been described as “cumbersome” with recognized “difficulties in claiming tax refunds”[4].

Penalties for Non-Compliance

Failure to comply with WHT obligations can result in significant penalties:[3][5][6][7]

  • Failure to withhold the tax: penalty equal to the amount of tax not withheld, plus payment of the tax due
  • Late payment: 2% per month of delay (or part thereof), up to the amount of tax due
  • Failure to notify the GTA of contracts with non-residents: QAR 10,000 penalty

Conclusion

Qatar’s withholding tax regime has evolved to capture a much broader range of services through the implementation of the “Consumption Test.” This has significant implications for non-resident service providers who may never set foot in Qatar but provide services that benefit Qatari entities.

Foreign businesses providing services to Qatari clients should be aware that virtually any service used or consumed in Qatar will likely trigger the 5% WHT, regardless of where the service is physically performed. While double taxation treaties may offer relief, the pay-and-reclaim mechanism means that service providers should factor the withholding tax into their pricing and cash flow projections, at least temporarily until refunds are processed.

For Qatari businesses, strict compliance with withholding and remittance obligations is essential to avoid penalties, including the monitoring of the 12-month “deemed payment” threshold for outstanding invoices.

The article was last updated on 21st May 2025 and may not include latest changes to the law.

References

  1. https://taxsummaries.pwc.com/qatar/corporate/withholding-taxes             
  2. https://www.krestonsvp.com/withholding-tax-wht-in-qatar-what-you-need-to-know/        
  3. https://www.antonioghaleb.com/services/tax-services/withholding-tax-wht-services                 
  4. https://www.aksaa.qa/assets/pdf/qatar_wht_manual.pdf            
  5. https://hlb-ag.com/services/tax-services/withholding-tax-wht-services/      
  6. https://gta.gov.qa/assets/pdf/Law No. (24) of 2018 Promulgating the Income Tax Law (3).pdf
  7. https://assets.kpmg.com/content/dam/kpmg/qa/pdf/2022/06/qatar’s-tax-law-and-regulations_digital.pdf

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