Starting a Business in a Free Trade Zone
Find out about getting a venture started in in a Qatar FTZ...
Non-Qataris are permitted to set up their own business in the country, but there are strict limitations on doing so.
There are two ways in which a foreigner can start a business in Qatar: on their own in a designated free zone, or outside these zones in conjunction with a local sponsor.
Setting Up a Business Within a Free Zone
Free zones are designated areas where foreign companies can set up businesses, guaranteeing them a certain degree of autonomy over their enterprise and freeing them of red tape, restrictions and some costs that apply to businesses located outside free zones. These zones are common in Gulf countries, and are often grouped by and named for particular industries, such as media or technology.
Established free zones in and around Doha include Qatar Science and Technology Park, which consists mainly of scientific research and development companies (current tenants include Williams F1, Rolls-Royce, Chevron and Cisco) and the Qatar Financial Centre.
Companies set up in a designated free zone can be wholly owned by a non-Qatari person or persons, whereas a company set up outside a free zone can only be 49 percent owned by a non-Qatari. Free zone based companies are also released from any obligation to take on a specified quota of Qatari employees, and are free to hire expatriates (subject to meeting the standard employer sponsorship procedures - see the section on Residency in Qatar).
Other benefits of setting up in a free zone include tax-free operation, and the entitlement to repatriate proceeds from the business, as well as to import goods and services relating to the business without paying customs duty.
The main disadvantage of setting up within a free zone is that companies are potentially at the mercy of higher leasing rates and related fees; this information can be ascertained in advance from the local authority of the free zone in which the business wishes to set up.
Setting Up a Business Outside a Free Zone
Establishing a business outside a free zone is a much more regulated procedure, and it is not legally possible for an expatriate to fully own their own company outside these zones. Under most circumstances, a foreign entrepreneur requires a Qatar-based partner (referred to as a sponsor), who must be granted a minimum 51 percent (and therefore controlling) stake in the business. The sponsor is not obliged to contribute financially or practically to the running of the company, and has the power to terminate the businesses operations without consultation.
Companies that operate outside a free zone are liable to a business income tax, which is calculated on a sliding scale of up to 35 percent. (This tax is not applicable inside a free zone.)
It is also worth noting that, should a business fail, there is a personal risk to the owner, since debt and financial irregularities are considered to be serious offences, and the person may not be allowed to leave the country. This risk is greater if loans have been taken out from Qatar-based banks rather than home-country ones (whether the business is in a free zone or not).
- For more information on setting up a business outside a free zone, see the Starting a Business Page