Tax returns in Income Tax Law Thursday, 17 March 2011 01:31

The Heir Apparent H H Sheikh Tamim bin Hamad Al Thani, Deputy Emir of Qatar, issued the Income Tax Law No. 21/2009, which was implemented as of January 2010.

The articles of the law were published in the twelfth issue of the Official Gazette on 27. 12. 2009, where the law obligates every taxpayer “natural or juristic person” who is engaged in an activity or realises the income subject to tax, has to register himself with the competent department to implement the provisions of this law.

Those who fail to register shall be fined with a penalty of QR5,000 and the Director of Administration in charge of implementing the provisions of this law may exempt the taxpayer from paying this penalty in the case of providing reasonable causes.

The law pointed out that the imposed tax is an income tax which shall be paid by the person who is subject to tax in accordance with the provisions of Law No. 21/2009.

The activity means every profession or trade or service or industry or venture or contract or any act aimed at achieving a profit or income and the taxable income is net income after the deduction of losses.

The law also imposed on the taxpayer the annual tax on total income arising from sources in the State during the previous tax year.

The benefits and banking proceeds outside the State shall also be subjected to the tax, provided that the result of amounts must have arisen from the activity of the taxpayer in the state, in addition to the commissions due under the agreements of the agency or brokerage or the commercial representation made outside the country from the activities that were performed.

The law pointed out incomes in the State of Qatar are subject to the tax, include the gross income resulting from the activity engaged in the State, gross income resulting from the contracts fully or partially implemented in the State and the gross income arising from property located in the State and the gross income arising from the shares or equities of companies resident in the State or listed in its financial markets and the benefits of the loans obtained in the state and finally the gross income resulting from the exploration or extraction or exploitation of natural resources located in the state.

The incomes exempted from tax include:

1. Benefits and the banking returns due to the natural persons who are not engaged in activities subject to tax in the state.

2. Benefits and returns on general treasury bills or development bonds or bonds of public bodies and institutions.

3. Capital gains arising from the disposition in real estate or securities by natural persons.

4. Dividends.

5. Gross income resulting from the craft activities that do not use the machines and the income of it do not exceed QR10,0000 in the year.

6. Gross income arising from agricultural or fishing activities.

7. Gross income by non-Qatari air or marine companies operating in the State on a condition of reciprocity.

8. Gross income of Qatari natural persons who are resident in the country, including their shares in the profits of juristic persons.

9. Total income of juristic persons resident in the State

The law defined the taxable income on the basis of gross income resulting from all transactions carried out by the taxpayer after deducting the allowed discounts and losses as well as the tax rate at 10 per cent of the taxable income of the taxpayer during the tax year.

The law regulated the procedures for the submission of tax returns as the taxpayer who is engaged in an activity is committed to provide the tax return to the management on the form prepared for this purpose during the four months from the end date of the accounting period showing the taxable income and the amount of the due tax.

The law provided the monetary penalties which mean that each taxpayer who does not provide the tax return within the period specified in this law shall be fined with a monetary penalty of one riyal for each day of delay.

Every taxpayer engaged in an activity or realizes an income not registered in the department or did not apply for the tax card within 30 days of this law shall be fined with a penalty of QR5,000.

The Director of Administration, who is implementing the provisions of this law, may exempt the taxpayer from entire or part of the penalty if he provides the reasonable grounds for the delay.

The law obligates the taxpayers engaged in business in the State to keep the accounting books, records and documents in accordance with the laws of the State and international accounting standards and maintain them for 10 years.

The competent department in the Ministry of Economy and Finance shall assess the tax on the basis of taxable income set out in the tax return, if approved by the Department of general revenues and taxes and the decision to assess the tax shall include the facts and information on the basis of which tax, taxable income, tax payable, monetary penalties as well as the duration for the payment of tax, monetary penalties and the place of payment are assessed.

According to the Law the tax return must be submitted to the competent department on the form prepared for this purpose, stating the taxable income and the due tax within four months from the end of the tax year noting that tax year period of twelve months begins on the first of January and ends at the end of December of each year so the tax returns referred to must be submitted before the end of April of each year.

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