Clyde and Co update: Carrying out industrial projects in Qatar

Industrial projects, with the exception of projects executed by the Government or any of its affiliated entities or corporations, are governed by Law No. (20) of 2006 Industrial Law (the "Industrial Law") which repealed Law (19) of 1995 (with the exception of its Executive Regulations which are still in force).

Doing Business in Qatar:

Non-Qatari entities doing business in Qatar must comply with Law No (13) of 2000 Regulating Foreign Investment in the Economic Activity (the "Foreign Investment Law"), which as a general rule, allows foreign participation in a company to be no more than 49% of the share capital of a company, with the remaining 51 percent of the share capital owned by one or more Qatari persons and/or a company that is wholly-owned by Qatari nationals. Except in very special cases, that company must be incorporated with limited liability in Qatar (an "LLC").

There are exceptions to the general rule. The exception relevant to industrial projects is pursuant to Article 2(2) of the Foreign Investment Law which provides that a non-Qatari entity (the "ForeignCo") may, subject to obtaining an exemption from the Qatar Minister of Business and Trade (the "MBT") (in effect, a Ministerial Resolution), own up to 100% of the share capital of an LLC that develops a project in, amongst other things, industry, development and utilisation of natural resources, energy and mining (the "Art2(2)Exemption"). The issuance of the Ministerial Resolution approving such level of ownership is discretionary.

Licensing:

In addition to the requirements of the Foreign Investment Law, an industrial licence is also required and may be granted pursuant to a Ministerial Resolution (issued by the Minister of Energy) upon recommendation of the Department of Industrial Development at the Ministry of Energy (the "Industrial Licence").

In order for an Industrial Licence to be issued to an applicant, the applicant must produce to the Ministry of Energy, amongst other things, a permit issued by the Ministry of Environment approving the applicant's project(s) (the "Environmental Permit"). The Environmental Protection Law No. (30) of 2002 (and its Executive Regulations promulgated pursuant to Ministerial Decision No. (4) of 2005) provides that a company cannot execute any industrial project without first being granted an Environmental Permit.

In addition, an applicant that is a ForeignCo intending to apply for an Industrial Licence and an Environmental Permit, may also consider applying to the Ministry of Energy for a recommendation to the MBT to approve the ForeignCo's application to own up to 100% of a company registered in Qatar, in accordance with an Art2(2)Exemption (discussed above). Such a recommendation by the Ministry of Energy is likely to expedite an application to the MBT.

A company granted an Industrial Licence may be granted any one of the following incentives provided for in the Industrial Law, at the discretion of the Minister of Energy:

- income tax exemptions;
- customs duty exemption;
- exemption of national industrial products from export duties and fees;
- the allocation of one or more plot(s) of land for an industrial project;
- the supply of power, water and fuel at concessionary rates; and
- other incentives as may be agreed by the GCC member states.

While traditionally an application for an Industrial Licence in Qatar could take more than 2 years, the Ministry of Energy has commenced an initiative to simplify and expedite the process so that applicants are more likely to be granted an Industrial Licence, provided there are no complications, within 12 to 15 months of an application being submitted to the Ministry of Energy.