Foreign Ownership in Qatar: When Is 100% Ownership Available?

A non-Qatari investor used, as a rule, to need a Qatari partner holding at least 51% of the share capital. That position has changed: Law No. 1 of 2019 on regulating non-Qatari capital investment in economic activity provides for the establishment of companies wholly owned by non-Qatari investors, so the local-ownership requirement is in many cases no longer necessary. The rule is not absolute, however, and the exceptions are where the practical question lies.

Where full ownership does not reach

According to official guidance, the 100% foreign ownership framework does not apply to the banking and insurance sectors, to companies engaged in the exploitation of natural resources, to commercial agencies, or to any other sectors decided by the Council of Ministers.

The last of those is the most important in practice: the list is not closed, and sectors may be added by decision. Whether a particular activity qualifies should therefore be verified against the specific activity intended, at the time of the investment, rather than from a general rule. Some activities may also require sector licences or approvals that are separate from the ownership question altogether.

The incentives the law provides

The foreign investment framework provides a number of incentives for the non-Qatari investor:

• Allocation of the land needed for the investment project, by lease or by the grant of a usufruct right.
• Exemption from income tax as provided under the Income Tax Law.
• Exemption from customs duties on the project's machinery and equipment, and on raw and semi-manufactured goods required for production that are not available locally.
• No expropriation except for the public interest, on a non-discriminatory basis, against fair compensation representing the economic value of the asset.
• Transfer of ownership of the investment to another investor, or its relinquishment in favour of the national partner in a joint venture.
• Settlement of disputes with third parties by arbitration or any other means of dispute resolution — labour disputes excepted.
• Transfer of funds relating to the investment out of the State, and the lease of premises for a period of up to fifty years.

The Council of Ministers may, on the proposal of the competent Minister, grant an investment project incentives and benefits in addition to those the law provides. Not every incentive, in other words, flows from a general provision; some are granted by decision in a particular case.

Mainland, free zones and the QFC are not one question

All of the above concerns investment on the mainland under the non-Qatari capital investment framework. Licensing through the Qatar Free Zones Authority or the Qatar Financial Centre is a separate regime. Qatar Financial Centre Law No. 7 of 2005 provides in Article 17 that State laws and regulations relating to taxation and duties of any kind do not apply to the QFC except as provided in that Law and the Regulations made under it.

The question of what ownership level is available therefore has no single answer: it is determined first by the licensing platform and then by the activity. What is said about ownership in a free zone is no authority for the position of a mainland company, and the reverse holds too. The available forms and platforms are set out in setting up a company in Qatar.

What to verify before committing

• The intended activity, precisely, and whether it falls within an excluded sector or one added by decision.
• The licensing platform, since it fixes the applicable legal regime before any question of ownership percentage arises.
• Any sector approvals the activity requires, which are separate from the ownership question.
• Which incentives actually apply to the project, and which of them require a specific decision.
• The agreed dispute-resolution mechanism, bearing in mind that labour disputes are excepted.

Eligibility conditions and approvals differ by activity, sector and licensing platform, and the position in force should be confirmed against the text of the law and with the competent authority before it is relied on. Our corporate and commercial practice advises on structuring foreign investment in Qatar.