Today James Swallow talks about issues when setting up a Limited Liability Company in Qatar.
It’s needless to say that Qatar is highly attractive to foreign investors looking to make significant returns. However, that being said, without the right preparation and research beforehand, it could very easily be the case that investors land themselves in hot water. Choosing the correct business vehicle and local partner is crucial for the safety and security of the investment over the long term.
Knowledge is key
Expats to Qatar come from over 150 countries and, whilst there are fantastic opportunities to be had, there are certain pitfalls that need to be navigated around to a) ensure the security and safety of your investment and to b) maximise your returns.
Investing in Qatar
With this in mind, I’d like to outline some of the key areas of consideration for setting up an LLC in Qatar.
Limited Liability Companies (LLCs)
- Setting up a LLC – Setting up an LLC is the most frequently used business vehicle for foreign investors establishing their company in Qatar. To start an LLC, a minimum share capital of QAR 200,000 is required.
This is deposited into a bank account until the Commercial Registration has been approved, at which point the money can be used as working capital for the day to day operations of the organisation.
In addition to this, 10% of each year’s net profits must be kept within a company until the reserve amounts to 50% of the share capital. Corporation tax of 10% is levied on the company’s net profit and the company is required to be audited by locally registered auditors.
- Office space – It’s often the case that one of the largest costs for companies setting up in Doha is finding suitable office space. Since Qatari law requires businesses to have a 12-month lease on an office space in order to obtain their trade licence. To search for offices in Doha you can click here. This should also give you a better indication of the costs involved in renting commercial property.
- Choosing the right Qatari partner – This is perhaps the most crucial thing to take into account when setting up an LLC. The Qatar partner is not required to contribute to running the company. However, as the 51% shareholder, they have the power to terminate business operations without consultation if the proper agreements aren’t being adhered to.
The Qatari partner could be either an individual or a 100%-owned Qatari company. It’s important to note that the parties’ share of profit does not necessarily have to reflect their shareholdings and that this can be established in the Articles of Association.
Having a Qatari company as a partner is often a more secure and robust solution for the foreign company and there are a number of companies which have been established with the sole purpose of assisting foreign entities establish a business presence in Qatar.
As Qatar’s population and economy continue to expand, the importance of would-be investors doing their research prior to making substantial investments will remain crucial.
In a country where debt and financial irregularities are seen as much greater offences than under UK law (for instance), investors should be doing everything they can to minimise their risk. If you end up in such a situation you could be barred from leaving the country.
To find out more about setting up an LLC or information about investing in Qatar or the UAE you can visit the Pro-Partnership website or download one of the free guides to Company Formation.
James Swallow is Commercial Director of Middle East based PRO Partner Group. PRO Partner Group specialises in providing foreign investors with a seamless and financially efficient means to setting up a profitable corporate presence in the UAE, Qatar and Oman.