Qatar- Managing tax in the region challenging: PwC

4/14/2016 1:29:26 PM

(MENAFN- The Peninsula)

DOHA: Qatar is often perceived to be a low tax or even a ‘no tax’ area however a recent survey of the region’s tax and finance leaders shows that managing tax in the region can be complex and challenging.

PwC Middle East recently launched its latest tax survey Managing tax which discusses tax and business challenges that companies in the region face the way their tax functions are organised and the impact of international and domestic tax reforms. “Tax regimes in the region can be complex and challenging to manage and their implementation can give rise to uncertainty and confusion which in turn creates risk. As a result companies need to manage their tax affairs with the same care and attention to detail that applies everywhere else in the world” says Dean Kern PwC Middle East Tax and Legal services Leader.

A key theme that emerged from the survey is the lack of clarity in the application of tax law and to some extent what laws are in place. For example in Qatar foreign investment law does not recognise a permanent establishment of a foreign company that is not registered with the Ministry of Economy and Commerce as a temporary branch but the tax law has a much broader definition of permanent establishments. This inconsistency can lead to confusion on whether foreign companies should pay corporation tax and suffer retention payments or be subject to withholding tax.

The reclaim process on retention payments is another area that the survey identifies as an area for review. Currently when a foreign contractor performs its services through a temporary branch the employing company is required to retain 3 percent of the value of the contract or the final payment whichever is greater. The foreign contractor can only get these funds released once the contract is complete all taxes have been assessed and paid and a No objection certificate is issued by Qatar tax authority. For long term contracts this can result in a considerable delay in receiving the retention payments.

Neil O’Brien Head of Tax at PwC Qatar said: “As the Qatar economy grows Tax administrations are required to manage an increasing number of taxpayers in a timely and efficient manner. Removing uncertainty and considering new models of compliance could provide increased clarity and consistency for taxpayers whilst maintaining resources efficiency for tax administration.”The Peninsula

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