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Qatar Legal Framework Regarding Foreign Investment, Intellectual Property and Taxation Issues

Roger R. Evans and Luciano A. Ruiz

Evans Kosut Davidson, PLLC
16000 Stuebner Airline Rd., Suite 200
Spring, Texas 77379

Note: The above summary is based on the latest information we have been able to obtain. The accuracy of this information, its applicability and effect in transactions involving U.S. and Qatar interests should be discussed and confirmed with local counsel in Qatar.


1. General Background

Qatar has attracted more foreign investment during the last seven years than it did throughout the first 24 years following independence from Britain in 1971. The main economic stimulus in Qatar is the development of its natural gas reserves in the North Field, the largest non-associated natural gas reservoir in the world. Qatar’s liquefied natural gas (LNG) industry has attracted foreign investment worth nearly USD 30 billion. The LNG industry will continue to be the most attractive sector for foreign investors, as Qatar Petroleum expects investments in upcoming projects will exceed USD 15 billion in the next three years.

A new investment law (Law No. 13 for the year 2000) was promulgated on October 16, 2000. This law allows for 100 percent ownership by foreign investors in certain areas, including services, agriculture, industry, health, education and tourism, and projects involving the development and exploitation of natural resources. Apparently, although ratified by the Amir, the Ministry of Finance and the Ministry of Economy and Commerce have yet to issue the necessary rules and regulations that are instrumental for the application of this law.

Meanwhile, foreign investment continues to be regulated by existing investment laws that set foreign investment, as equity, at no more than 49 percent, with the local (Qatari) partner holding at least 51 percent. It should be noted that foreign firms continue to be required to use a local agent for the purposes of investment as well as immigration (sponsorship and residence of employees). In both private and public sector foreign investment projects, personal contacts and local agents are critical.

While the private sector handles small foreign investments, foreign investments in the area of oil and natural gas are directed by state-owned Qatar Petroleum (QP, formerly Qatar General Petroleum Corporation or QGPC). Foreign firms can deal directly with Qatar Petroleum without engaging a local agent. The Amir has issued Amiri Decrees allowing most major international energy firms to establish 100 percent foreign entities in Qatar.

Qatar’s privatization efforts are largely focused on the participation of Qatari nationals and citizens of the countries which are members of the Gulf Cooperation Council, i.e., the United Arab Emirates, the State of Bahrain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the State of Qatar, and the State of Kuwait (the “GCC”). The Government has partially privatized the telecommunications and electricity and water supply sectors recently. Qatar Electricity and Water Company (QEWC) was officially established in 1993 with 43 percent ownership by the Government, 34 percent by major companies and 23 percent by private sector and individuals. Qatar Telecom was partially privatized in 1999, with 45 percent private ownership and the remaining shares held by the Government. Qatar Fuel Co. (WOQUD) was created in March 2002 to allow Qatari private investment in the energy sector. The Initial Public Offering (IPO), the first of its kind in this sector, was significantly over-subscribed.

2. Conversion and Transfer Policies

Qatar’s official currency, the Qatari Riyal (QR), is a floating currency. Due to little demand for the riyal outside Qatar, the Government has pegged its exchange rate to the U.S. dollar. The official rate is QR 1.00 for USD 0.27 or USD 1.00 for QR 3.64, as set by the Government in June 1980. This was reaffirmed by an Amiri decree issued July 9, 2001, as a step towards establishing a common currency for the GCC countries, a decision agreed upon at a GCC Summit held in Bahrain in December 2000 and expected to take effect in 2010. The Government maintains a floating rate against all other currencies, with the exception of four GCC countries - Saudi Arabia, Oman, United Arab Emirates and Bahrain - whose currencies are similarly pegged to the dollar.

Qatar does not delay remittance of foreign investment returns nor does it restrict transfer of funds associated with an investment. Similarly, there are no limitations on the inflow or outflow of funds for remittances of profits, debt services, capital, capital gains and other returns. However, local as well as foreign contractors may confront a delay of over three months in receiving their amount due without interest.

3. Right of Foreign Investors to Private Ownership and Establishment

The Commercial Companies Law, Law No. 5 for the year 2002, issued in May 2002 (replacing Law No. 11 for the year 1981) controls the establishment of all private business concerns in Qatar. The updated law provides for corporate mergers, corporate bonds, and the conversion of corporate partnerships into joint stock companies.

Joint ventures involving foreign partners almost always take the form of limited liability partnerships. Law No. 25 for the year 1990, which controls foreign investment, does not allow foreign investors to enter into a joint stock company with Qatari partners. Foreign investors may own up to 49 percent, and the Qatari partners no less than 51 percent, of a limited liability concern. Foreign partners in ventures organized as limited liability partnerships must pay the full amount of their contribution to authorized capital in cash or in kind, prior to the start of operations. Usually, such firms are required to set aside 10 percent of profits each year in a statutory reserve, until it equals 50 percent of the venture’s authorized capital.

Foreigners, excluding GCC nationals, are not allowed to own property or invest in privatized public services. However, in early 1999, non-Qataris were allowed for the first time to invest in the partially privatized (45 percent) Qatar Telecom. Amiri Decrees have allowed foreign industrial firms up to 25 percent equity in state-owned steel, fertilizer and petrochemical industries. Their contribution took the form of technology transfer and/or marketing expertise. It is generally believed that only Qatari nationals will be allowed to own portions of the privatized shares of hydrocarbon industries. The Government is now looking at this step as a possible means of encouraging private sector development.

4. Corruption

A bribe to an official or a foreign official in Qatar is viewed as a crime. Law No. 14 for the year 1971 stipulates that a Government official who is convicted of corruption may receive up to seven years’ imprisonment.

According to Law No. 14, corruption should be investigated by the Ministry of Interior’s Office of the Attorney General and Criminal Investigation Department. Final judgments are made by the criminal court, which falls under the Ministry of Justice. While normal punishment for giving/taking a bribe is imprisonment of up to seven years, the minimum is one year’s imprisonment and/or a fine worth QR 1,000 (USD 275).

Of course, U.S. investors attempting to do or doing business in Qatar are subject to the provisions of the U.S. Foreign Corrupt Practices Act.

5. Dispute Resolution

Qatar is not a member of the International Center for the Settlement of Investment Disputes (ICSID) and is not a signatory to the New York Convention of 1958. If and when investment disputes do occur, Qatar accepts binding international arbitration between the Government and foreign investors. However, Qatari courts do not enforce judgments of other courts in disputes emanating from investment agreements made under the jurisdiction of other nations. Qatar and the U.S. have no reciprocity agreement in this area. Resorting to arbitration to solve disputes can be more binding if clearly stipulated in contracts. Effective Qatari laws - civil and Sharia (Islamic Law) - have provided sufficient means for enforcing property and contractual laws, however, this can be a long and bureaucratic process.


A. International Organizations and Treaties

Qatar is a member of/signatory to the following organizations/treaties:

1. World Intellectual Property Organization (WIPO) since September 3, 1976;
2. World Trade Organization (WTO) since January 13, 1996;
3. Paris Convention for Protection of Intellectual Property on April 5, 2000, effective July 5, 2000; and
4. WIPO Copyright Treaty on July 28, 2005, effective October 28, 2005 but Qatar has not become a signatory to the WIPO Trademark Law Treaty.

B. Qatar Domestic Laws and Regulations

Within Qatar, owners of trademarks and copyrights and holders of patents depend on Qatari laws and regulations for protection.

With respect to patents, as a member of the GCC, Qatar is governed by the Patent Regulations of the GCC. Registration of a patent with the Patent Office of the GCC confers protection to that patent in the territory of the six member states.

As to trademarks, Law No. 3 of 1978, Administrative Decision No. 47 of 1986, and Ministerial Decree No. 17 of 1987 governed the Qatari trademark regime until 2002. Under Law No. 3, names of distinctive features, signatures, words, letters, numbers, designs, pictures, symbols, stamps, seals, vignettes and any other sign or combination of signs having a distinctive character could be registered as a mark. Marks without distinctive features, expressions, designs and signs of immoral character or contrary to public policy, portraits or emblems of individuals without their permission and marks likely to deceive the public were among the things that could not be registered as a mark.

Applications for and registrations of marks are published in the Trademark Gazette. Opposition may be filed within four months from the date of publication. Upon registration, the mark is protected for ten years, and the protection is renewable for similar periods. The rights confer exclusive ownership of the mark. Lack of use of a mark in Qatar for five consecutive years is a ground for challenge under Law No. 3. Violations of the law may give rise to criminal penalties.

In 2002, Qatar took a number of steps to enhance the protection of intellectual property rights afforded by country’s laws which were in effect at that time. The Ministry of Economy and Commerce drafted two new laws: Copyright and Neighboring Rights (Law No. 7 of 2002) and Trademarks (Law No. 9 of 2002) to bring legislation in line with the World Trade Organization TRIPS Agreement and other international conventions. The new copyright and trademark laws were ratified in June 2002, and all previous laws were rescinded.


The Income Tax Law of Qatar, Law No.11/1993 became effective as of January 1, 1993. It imposes income tax on the taxpayer (natural persons and corporate bodies) arising from activities in Qatar, including profits from any contract executed in Qatar, profits realized from the sale of any asset of an establishment, agency commissions, regardless of whether the contract with respect to which a commission is due is executed inside or outside of Qatar, consultation fees, amounts from the sale, rent or concession of intellectual property rights, bad debts which are collected by the taxpayer and net profits upon a dissolution of a company.

Taxable income is determined after allowable deductions are made for interest payments, rentals, salaries and bonuses, taxes and fees (other than income tax), depreciation, losses from the sale of assets and humanitarian or scientific donations.

Revenues relating to projects in Qatar, even if executed outside of Qatar, are declared for Qatari tax purposes. Evidence that the work was implemented outside of Qatar is necessary to avoid tax liability with respect to the profits of the project.

Salaries, wages, personal bank interest and other forms of personal income are not subject to tax.

Tax is calculated on a progressive scale rising to a maximum rate of 35 percent on taxable income above QR 5 million.


Evans & Kosut